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Making Money with Preferred Securities
An invaluable nineteen page discussion of preferred stocks and exchange traded corporate debt
Published by BondsOnline Group, Inc.
Your Source for Fixed Income Investing
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Your source for preferred securities and exchange traded corporate bond information.
Preferred stocks have become increasingly complex, as new security structures have been introduced into the financing mix. Whereas preferred stocks were once issued solely as equity on a corporation’s balance sheet, now preferred securities may be in fact corporate debt instruments and pass-through securities identified by a variety of names and acronyms. Not only are preferreds issued with different balance sheet treatment for issuers, they also have various levels of subordination, various countries of origin, and, most importantly, a variety of tax consequences for both issuers and investors.
The various sectors of the preferred market have always had different tax implications, depending on the type of investor. Prior to 2003, the only practical tax considerations in the preferred securities marketplace were for corporations that were eligible for the dividends-received deduction (DRD) and non-U.S. investors that were eligible for reduced withholding on interest income (NRA). However, the Jobs and Growth Act of 2003, which reduces the tax on dividends paid to individuals, complicates the matter. While these same tax considerations have not changed as a result of the recent tax cuts, individual investors are now eligible for reduced taxes on dividend income from select preferred securities.
The following is a discussion of preferred securities in their various forms, compiled from leading sources, and is available for informational purposes and assistance to subscribers of PreferredsOnline, and to customers of BondsOnline Group, Inc. Using the information included herein, subscribers can custom search for securities among the 3,000 + North American preferreds and exchange traded corporate bonds monitored daily, create portfolios, and track the significant corporate events important to their investments.
Savvy investors and securities professionals rely on PreferredsOnline and BondsOnline® regularly for information, education and direction in making bond and fixed income investment decisions.
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