This week, the Virtus InfraCap U.S. Preferred Stock ETF (NYSE Arca: PFFA) gave shareholders a nice earnings boost. The niche fixed income fund revealed its latest monthly dividend on January 22nd. This kept PFFA’s yield at the highest level in the industry.
For the payment date of January 30, the $0.1675 per share dividend keeps PFFA’s trailing 12-month return above 10%. Investors who want to make money have praised PFFA’s stability since interest rates are expected to keep going up until 2024.
As advisors try to help clients find stable incomes during this latest round of market turmoil, PFFA is a haven for those with a fixed income. Virtus InfraCap, the fund manager, built a safe place for investors to get their money back by focused on US-based preferred share issuances.
Preferred shares give buyers faster access to assets and dividends than common shares. Because of this benefit, investment grade companies can reliably give returns between 5 and 7 percent. PFFA can make more money with InfraCap because it carefully looks at:
- Credit Risk Metrics
- Term Structures
- Tax Advantages
By doing this, the fund keeps a portfolio of favorite stocks that is averaged over 10% and is safer than many other options. The more than 500 issues cover a wide range of topics without being too broad.
PFFA is also good for investors who need cash flow in between the three-monthly payments because it pays out every 30 days. By giving dividends 12 times a year, the fund lets owners get their money in a more steady and measured way.
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This stays the same when prices go up and down. Even though the S&P 500 fell almost 20% in 2022, PFFA kept losses to less than 10%. Even though it was a rough year, the fund still managed to pay dividends of $1.98 per share.
As markets become more volatile again in 2023, fixed income safe havens like PFFA help investors who are retired or very close to retirement reduce their risk. Preferred shares are better than regular business and Treasury bonds when every basis point counts.
There is always a tradeoff between risk and profit when making an investment. Also, buyers should read the prospectus carefully to see if PFFA’s risks are in line with their goals.
But PFFA’s 10%+ return and over $700 million in assets make it worth a close look for people who want a steady stream of income. Since payouts happen every month, owners can easily increase their dividends when interest rates go up.