INVESTING IN PREFERRED STOCK THROUGH ETF'S

Recently I decided to look into investing in preferred stocks, as a means of boosting dividend cash flow. I currently hold around 30 different stocks in my regular investment portfolio, so I'm not really interested in adding a lot of new stocks to keep track of. So instead of researching individual stocks, I decided to simplify the move by purchasing shares of an ETF that invests in preferred stocks.

The one I've chosen to add to my portfolio is ISHARES S&P U.S. PFD STOCK (PFF :NASDAQ). Their current dividend of $2.92 works out to a 7.98% yield on their recent stock price of $36.62. Since their top ten holdings are all financials, I won't be concentrating a great deal of my investment capital in this fund, but I don't think it out of line to invest around 5% of my cash in the fund. At their current yield, I could have all my money back, from dividends alone, in less than 9 years and anything after that would be icing on the cake. I could also benefit from any further recovery in the financial sector, while reducing risk by spreading my investment over a wide range of financials held by the fund. This will be a long term addition to my portfolio.

Normally I strongly advocate investing in individual stocks over funds. In a case like this however, where I don't want to expend a lot of time and energy researching individual investments, I've opted for an ETF to broaden my investments and take advantage of the preferred stock issues.