Are Lower Tax Preferred Stock Dividends Really A Better Deal?

Preferred stock investors who acquire shares in a regular income account rather than a tax-deferred account such as an IRA, will often favor issues that are designated as qualifying for a lower tax treatment. But most risk-averse preferred stock investors would probably avoid all but six of today’s Qualified Dividend Income preferred stocks. And the lower coupon rate that QDI-designated preferred stocks offer often eliminates the tax savings when compared to similar non-QDI alternatives.

Favoring QDI-designated preferred stock for your regular income (non-IRA) account may not be delivering the after-tax benefit that you’ve been counting on...

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