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Tax Advantages of Preferred Securities

Did you know…

Many shares of preferred securities produce qualified dividend income which can be taxed at rates ranging between 0% to 20%, which is significantly lower than those of bond tax interest rates that can be taxed at a rate of as high as 39.6%. While much depends on an investors’ tax bracket and when the security was held, preferred dividend income is frequently taxed at a lower rate that other income. Each preferred security issued has a prospectus that should highlight the taxable status of its dividends. 

 

Source: Charles Schwab & IRS


What are we thinking?

While we primarily incorporate investment grade preferreds to help enhance the overall portfolio’s current yield, the potential tax advantage of the income generated from preferred securities can be seen as an additional benefit of owning them. 

By understanding the nuances of preferred securities, you are better positioned to get the most out of this type of investment. 

 


 

This information is intended solely to report on investment strategies and opportunities identified by Roosevelt. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. References to specific securities and their issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Please contact us at 646-452-6700 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions, or if you would like to request a copy of our Code of Ethics. Our current disclosure statement is set forth on our Form ADV Part II, available for your review upon request, and on our website, www.rooseveltinvestments.com.

Past performance is not a guarantee of future results. Indices are unmanaged and cannot accommodate direct investment. Themes assigned as per Roosevelt Investments’ evaluation. Risk tools may include cash or other securities that we believe possess a low or inverse correlation to the overall market.

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The Roosevelt Investment Group, Inc. is an independent investment management firm that is not affiliated with any parent organization. The Roosevelt Investment Group, Inc. manages equity, fixed income, and balanced assets for primarily U.S. clients. The Roosevelt Investment Group, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission and notice filed in all 50 states.

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