Preferred stocks can offer investors plenty of attractive income – and do so at a favorable tax rate – but they should proceed with caution before adding them to their portfolio. Preferred stocks are hybrid assets, combining attributes of bonds and equities, and their issuers include banks and utilities . He said these securities make up no more than 15% of his clients' fixed income allocation. Preferred investors would be paid before the stockholders, but they are well behind the bondholders in terms of priority. There is also the iShares Preferred and Income Securities ETF (PFF) , which has a 30-day SEC yield of 6.33%.

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Persons: preferreds, Ken Waltzer, Frank Sileo, Collin Martin, Tapping, Wells Organizations: Wealth, UBS Financial Services, Americas, UBS, Poor's, Schwab Center, Financial Research, Trust Preferred Securities, SEC, Holdings, Barclays, Securities ETF, Citigroup, NextEra Locations: Los Angeles, Wells Fargo, Albemarle