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.
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Preferred Shares: A Best-of-Both-Worlds Investment
- Preferred shares offer a blend of equity-like risk for issuers and cheaper capital raising than common equity.
- Investors benefit from higher yields than common equity and preferred returns, typically through dividends.
Why Preferred Shares Lack Attention
- Preferred shares are less common than stocks, lack a growth component, and don't offer dividend growth, making them less popular.
- Investors often prioritize total returns, where common equities excel due to their growth potential.
Baby Bonds: Approachable Fixed Income
- Baby bonds offer a more accessible entry to bond markets with lower par values and exchange trading.
- They carry less risk than preferred securities due to their higher position in the capital stack.