Investing Experts
Baby bonds, preferreds, and helping investors afford retirement
Mar 25, 2025
In this enlightening discussion, Samuel Smith, an investing group leader at High Yield Investor, and Scott Kaufman, managing partner at High Dividend Opportunities, explore the benefits of preferred shares and baby bonds for savvy investors. They share their top selections and delve into the balance of yield versus risk. The duo also emphasizes the importance of investing in quality companies and how the current political climate can impact investment strategies while offering tips to avoid common retirement regrets.
39:55
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Quick takeaways
- Preferred shares provide investors with higher yields and lower risk compared to common equity, while offering companies flexible capital-raising options.
- Baby bonds allow easier access to the bond market with lower capital requirements, presenting diverse income opportunities with contractual protections for investors.
Deep dives
Understanding Preferred Shares
Preferred shares offer companies a way to raise capital with less risk than traditional debt while providing investors higher yields than common equity. Companies typically favor issuing preferred shares due to their lack of a contractual obligation to pay dividends, which allows for greater flexibility during challenging financial times. From an investor's perspective, preferred shares are appealing because they provide income that is often deemed more secure, sitting higher in the capital structure than common equity. However, the lower coverage of preferred shares in the investment landscape has led to less attention and discussion compared to common stocks, even though they can be an excellent option for yield-seeking investors.
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