The Preferred Income Portfolio for Income Generation


Sheaff Brock

Sheaff Brock

Founded in 2001, Sheaff Brock is an independent, fee-only investment advisory firm with over $1 billion under management. Sheaff Brock uses various investment strategies, such as the Preferred Income Portfolio strategy, to earn investors income.

A Preferred Income Portfolio is focused specifically on stocks that generate high dividends for constant income. The portfolio consists of 20-25 preferred stocks spread out to include cumulative preferred, adjustable-rate preferred, callable preferred, trust preferred, and fixed-to-float preferred. The main objective of this strategy is consistent income generation while preserving capital.

Developing a Preferred Income Portfolio starts with assessing different preferred stocks with a bias toward stocks with a par value of $25, a BB rating or higher, and over $400 million in outstanding shares. This screening produces a list of 300 stocks that are evaluated and ranked according to call date, yield to call, credit rating, and liquidity. The final scores are used to come up with a high-income generating portfolio. The portfolio is actively managed, with issues falling below acceptable yield metrics under evaluation for replacement.

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