LDP Overview

Fed's Impact on Preferred Stocks: The Federal Reserve's interest rate cuts are expected to benefit preferred stocks, which offer higher payouts compared to common shares, making them attractive investments during periods of falling rates.

Preferred Stocks vs. Common Shares: Preferred stocks are hybrid securities that combine features of stocks and bonds, providing dividends and ownership while often trading like bonds, which makes them appealing when interest rates decline.

Closed-End Funds (CEFs) for Diversification: Investing in preferred stocks can be complex, but closed-end funds (CEFs) offer a simpler way to gain exposure, often at discounts to their net asset values, and can enhance yields through leverage.

Highlighted Preferred Funds: Three preferred funds are discussed: Cohen & Steers Limited Duration Preferred and Income Fund (LDP) with a 7.2% yield, John Hancock Preferred Income Fund III (HPS) at 8.6%, and Nuveen Preferred & Income Opportunities Fund (JPC) yielding 9.8%, each with varying levels of risk and investment strategies.

Tariffs and Economic Impact: President Trump has a long history of advocating for tariffs, recently imposing a 10% levy on Chinese imports while delaying additional tariffs on Mexico and Canada. Despite concerns about inflation, studies suggest that tariffs may not significantly raise prices due to their negative impact on economic growth.

Investment Strategies in Bonds and Preferred Stocks: Investors are advised to focus on bonds and preferred closed-end funds (CEFs) as safer investments amidst tariff-related market volatility. Specific CEFs like Cohen & Steers Limited Duration Preferred and Income Fund, Flaherty & Crumrine Preferred Securities, and Nuveen Variable Rate Preferred & Income Fund offer attractive yields and diversification opportunities.