Just wondering if there are interesting Preference Shares that can be a kind of income alternative to bonds, as T212 is unable to provide fixed income instruments (e.g. bonds) and excluding ETFs, ITs or high yield dividend paying stocks.
It would be interesting, if the community could share preference shares denominated in several currencies (USD, EUR, GBP) and from different economic sectors and countries to better diversify the source of income.
@T212, a suggestion, maybe creating a new category in the Search tab, about “Preference Shares” (similar to existent “Growth” or “Dividend”)?
Further to this useful thread, and thank you to RLX for posting that article, I’m wondering if anyone believes there to be any advantage to preference shares?
Ordinary shares have the obvious advantages that you own part of the company, the dividends can go up when times are good (although obv the reverse is also true) and that even if they don’t go up by that much, most companies seem to modestly adjust by inflation.
Preference shares on the other hand seem to be fixed, not even adjusting for inflation. I know that their fixed nature is the whole point, however, other than the fact that they cannot be cut or cancelled, is there any advantage to them at all?
Taking Aviva Plc - 8.75% PRF (AV.A) as an example, they’ve been paying 4.375p per share twice annually since 2012. 4.375p today is obviously worth a lot less than it was 11 years ago.
In fact, preference shares/stocks can have the dividends temporary cancelled, it depends of their prospect and categories of preference shares. Generally it’s due to special situations. The four categories of preference shares:
Financial institutions instruments, more specifically any type of bank shares and debt are very sensitive to special legislation/regulation and situations.
If they are Cumulative preferred stock, the shareholder will receive the dividends not paid in the past, plus interest income on the delayed dividends if applicable.