Quick Read – PFFA generates a near-10% monthly yield by running 20.5% leverage and actively selecting high-coupon preferred issues that passive index funds underweight or exclude. – PFF and PFFD trade leverage risk for lower yields; PFFA has raised its monthly distribution every…
ar since 2020 while posting 32% in five-year gains. – Falling rates let issuers call high-coupon preferreds at par, forcing reinvestment at lower coupons. This is the slow, quiet mechanism that trims PFFA’s distributions over time. – The Virtus InfraCap U.S
Preferred Stock ETF (NYSEARCA:PFFA) pays $0.1725 per share every month, which works out to roughly a 9.9% forward yield at a recent share price near $21. Preferred stocks sit in a grey zone between bonds and equities, and PFFA layers modest leverage on top of that already ambiguous asset class. This article walks through where the income comes from and whether the current distribution looks durable.
How PFFA Manufactures a 9.9% Yield PFFA is actively managed by Infrastructure Capital Advisors and holds a broad basket of U.S. preferred securities. Preferred stock is a hybrid instrument. It pays a stated coupon like a bond, but sits below debt in the capital structure and can be suspended or deferred if the issuer runs into trouble.