Did someone ask you if you want to buy preferred stocks? As a first-time investor in the stock market, you’re asking yourself if it is a good investment. Let us try to find out.
What Is a Preferred Stock?
A [referred stock is another classification of stocks according to rights. The other type of stock according to rights is the common stock or ordinary shares. Having invested in preferred stocks gives the holder a higher claim on the company’s earnings and assets. Here is a sample list of preferred stocks as of June 11, 2018.
|Company Name||Stock Code|
|8990 Holdings, Inc.||8990P|
|Del Monte Pacific Limited||DMPA1|
|Del Monte Pacific Limited||DMPA2|
|DoubleDragon Properties Corp.||DDPR|
|First Gen Corporation||FGENG|
|First Philippine Holdings Corporation||FPHPC|
|GT Capital Holdings, Inc.||GTPPB|
|GT Capital Holdings, Inc.||GTPPA|
|Globe Telecom, Inc.||GLOPP|
|Leisure & Resorts World Corporation||LRP|
|Megawide Construction Corporation||MWP|
|Phoenix Petroleum Philippines, Inc.||PNX3B|
|Phoenix Petroleum Philippines, Inc.||PNX3A|
|San Miguel Corporation||SMC2C|
|San Miguel Corporation||SMC2B|
|San Miguel Corporation||SMC2I|
|San Miguel Corporation||SMC2H|
|San Miguel Corporation||SMC2G|
|San Miguel Corporation||SMC2F|
|San Miguel Corporation||SMC2E|
|San Miguel Corporation||SMC2D|
|Swift Foods Inc.||SFIP|
|San Miguel Food and Beverage, Inc.||FBP2|
If you choose to invest in preferred stocks, you must diligently do a thorough background check of the company. Dividends are guaranteed on a regular, quarterly, or semi-annual basis. Confirm for yourself that the company is financially stable in meeting their dividend obligations before investing.
Will It Be Good for My Portfolio?
If stability and regular income is something you are looking for, preferred shares are a good investment. Buying preferred stocks is excellent for people who do not want to lose their money and want to try the stock market. But you might be wondering how much it costs.
You must understand this analysis – prices of preferred stocks need to drop if interest rates climb up. These prices are necessary to match a healthier return to investors. Likely, the opposite occurs if the interest rate decreases.
These mechanics exist because prices of preferred stocks are not as unpredictable as common shares. The appraisal of preferred shares is not driven by profits but by the interest rate. Since dividends for preferred stocks paid regularly, its market value is effortlessly affected by the movement on interest rates.
Having to rely on your analytical thinking and keen observation can spell out your financial goal. We can never learn anything overnight. It will always be gained through experience but knowing the “what if’s” would give you a better chance of winning.
It is a common notion though that investment type is risk-free. Regardless, having a balanced portfolio minimizes your overall risk. Allocating part of your investment on both preferred and common shares is the best way to go.
Would you like to have access to our recommended stocks? Take a look at our Top Stock Picks.
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