WITH INTEREST RATES IN THE gutter, you might think you need to become a loan shark to earn 6%. But with preferred stocks, you can get that return without breaking the law. Preferreds have features of both stocks and bonds. Like stocks, preferreds give you an equity stake in a company. Their dividends qualify for the long-term capital-gains tax rate, which means they face a maximum tax rate of 23.8%. Like bonds, preferreds distribute a fixed amount of income and get repaid at par value when redeemed, normally at $25 per share. But preferreds rank behind bonds in the pecking order of who gets paid first if a company goes bust.
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