Virtus InfraCap US Preferred Stock ETF

PFFA

Market cap $1.83B

Virtus InfraCap U.S. Preferred Stock ETF offers high income and diversification through U.S. preferred securities, with a current yield of 9.47%. PFFA outperforms the S&P U.S. Preferred Stock Index but slightly underperforms the S&P 500, especially during recent market rallies driven by AI speculation. The ETF's diversification across sectors, including financials, real estate, and utilities, helps mitigate risk, especially in uncertain economic times.

If you are looking for a source of income that outlives you, look into dividend ETFs that are time-tested over decades.

For the quarter, the Virtus InfraCap U.S. Preferred Stock ETF returned -0.10% on net asset value (NAV), while the Benchmark Index returned 2.31%. The Fund paid a monthly dividend of $0.17 per share for each month of the quarter. The Fund's relative performance was mostly impacted by its underweight in mandatory convertible preferred stocks, which trade more similarly to common equity than fixed income.

PFFA has recently performed very well, despite the interest rate cuts and its exposure to floating preferreds (including negative yield-to-call risk). The yield has dropped to 9%, which raises the question of whether the yield is too low relative to the theoretically unfavorable environment. In the article, I share multiple reasons why this is not the case.

PFFA has consistently been able to find higher yielding preferred offerings that don't have excessive default risks. This Virtus fund recovered nicely from COVID, the investment's holdings held up well even in a more challenging economic environment despite initially selling off. PFFA should continue to offer investors consistent and substantive income even with rates likely falling more moving forward.

Enjoy massive income from the market in an extremely easy and simple portfolio. We encourage investors to hold at least 42 investments, but today, we create a four-fund alternative. Your retirement, your future – you are responsible for your success.

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Given heightened economic uncertainty, I am leaning more defensive and sticking with my dividend growth investing strategy, emphasizing diversification and income stability. The frozen housing market, soft labor conditions, and stagnating consumer spending signal potential economic weakness, despite optimism in select sectors like tech. My ETF portfolio review shows shifting leadership, with midstream energy outperforming previously, but preferreds and tech-focused ETFs now leading as trends evolve.

Rate cuts are likely imminent. This could be a major catalyst for dividend investors. We expect significant upside and highlight some of our top picks.

I built a preferred stock portfolio starting in 2022 in anticipation of falling inflation and interest rates, which has delivered strong double-digit returns. With fiscal and monetary policy now more aligned, I expect inflation to return to the Fed's 2% target and falling interest rates creating further upside for preferred stocks and ETFs. Preferred stocks RITM.PR.D, ABR.PR.F, CIM.PR.C, and ETFs PFFA, PFFR, and PFXF should benefit from declining rates over the next year.