PGF: My No. 1 ETF Combining Yield And Safety

I think PGF, right now, given the helicopter money flowing from the skies above Washington, D.C., is among the safest holdings in my portfolio. I cannot retire on the income from Treasury Bills, Notes or Bonds. After inflation and taxes, they would leave me with a negative return. I do not mind using Treasury ETFs for between-investment monies, but I also need some investments I view as “almost” as safe, but which pay a higher dividend or interest.

Invesco Financial Preferred – PGF – does just that. At its current price, the 95 cent per annum dividend (paid monthly) provides a yield of 5.25%.

The net expense ratio is 0.62%. The shares have enough volume (about 745,000 shares per day over the past 90 days) to keep the bid/ask spread nice and tight should you need to sell in a hurry. Its beta to the stock markets is a reasonable 0.68. Finally, it holds about $1.5 billion in portfolio assets.

Another reason I choose to buy financial preferreds via old friend PGF is that, while all preferreds are less liquid (especially during a panic) the big banks and brokerage titans have a ready outlet for selling that you and I don’t have: They have a captive audience of clients. If they cannot trade their own bonds among themselves and other institutions like pension funds and ETFs, they always can recommend them (with the appropriate caveat, of course) to their own bank/brokerage clients.

There's a reason why the SEC, after the deluge from October 2007 to March 2009, did not fight the idea of banks and brokerages merging into one entity. Mssrs. Glass and Steagall would be rolling over in their graves.

PGF is a core holding for me. I suggest you do your own due diligence and see if you might agree.

Good – and safe -- investing.

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Disclosure: I am long PGF.

Disclaimer: I do not know your personal financial situation, so this is not "personalized" investment advice. I encourage you to do your own due diligence on ...

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