Collect a 7.3% Yield Starting October 2
September 8, 2017
The 7% Retirement Solution
Nowadays, it’s tough to find income.
Bank accounts pay out next to nothing. Bonds yield only one or two percent.
I’ve found one investment, however, that pays out three times more than most dividend stocks. Thousands of retirees count on this little-known investment for reliable, monthly income.
But if you want to collect this oversized yield, then you need to act fast; the next round of checks will be mailed out in a few weeks. To be eligible, you have to sign up by Wednesday, September 13.
Let me explain.
The past few years, I’ve become a big advocate for the Nuveen Preferred Securities Income Fund (NYSE:JPS).
This closed-end fund owns investment-grade preferred shares. These issues exist right in the sweet spot of the investment universe, combining the safety of bonds with the returns of stocks.
And, while most mom-and-pop investors have never heard of them, preferred shares have a big following on Wall Street. I’ve called them my “retirement solution.” If you want reliable income, they’re worth digging into.
Why? Well, preferred shares sport big yields, for starters.
Issues come with large, upfront distributions, and—like bonds—these payments usually stay fixed. For this reason, many of these securities yield anywhere from six percent to an even 10%.
Nuveen boosts this payout further through a modest amount of leverage. The fund borrows about $0.30 in debt for every $1.00 in equity. This brings the total yield up to 7.3%, which gets paid out in monthly installments.
Better still, preferred shares are safer.
If you own common stock, you’re last in line to get paid. And, because distributions do get cut from time to time, share prices can swing erratically.
Preferred owners, in contrast, sit higher up on the totem pole. Their distributions must get paid before common shareholders see one red cent. The peace of mind usually comes with fewer ups and downs in the unit price, and fewer sleepless nights for owners.
Furthermore, preferred funds often come with a cumulative clause.
This means any missed distributions must be paid out to owners before the common dividend can resume. But, when you buy top-quality issuers, this usually doesn’t come up.
Of course, you can’t call preferred funds a slam dunk. Bad names skip payments occasionally. Higher interest rates can hit prices.
Nuveen does a good job avoiding these problems, though. The fund cuts risk by sticking to only the high-quality issuers. And, by owning a basket of securities, you don’t get killed if any one name goes under.
Earn Monthly Payments By October 2
In a way, owning preferred funds like JPS stock is like having platinum status with an airline.
Normal customers get a seat and not much else. Elite cardholders, by comparison, enjoy lounge access, priority check-in, and lots of other benefits.
For owners, the next round of distributions will get mailed out in a few weeks. To be eligible, you have to become an owner by September 13. After that, you can expect to collect your first dividend on October 2.
