Flaherty & Crumrine Dynamic Preferred and Income Fund (DFP) Stock

Preferred securities have shown strong performance in 2024, offering high yields and potential tax advantages, making them attractive for income-focused investors. Flaherty & Crumrine's CEFs, particularly DFP and FLC, provide compelling opportunities with yields around 7% and significant discounts to NAV. DFP, with a 9% five-year total return, and FLC, with a slightly higher recent return, are top picks for long-term total returns.

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The Flaherty & Crumrine Dynamic Preferred and Income Fund has marginally underperformed the S&P 500 ETF in 2024. DFP is heavily tilted towards the financial sector, with the US, Eurozone and the UK as top geographic exposures. Cuts in central bank rates around the world are likely to increase the appeal of preferred securities.

PTA: This fund may be at risk of a market downturn.

The Flaherty & Crumrine Dynamic Preferred and Income Fund aims for significant current income by investing in income-producing assets, particularly in the financial sector. The DFP ETF is highly leveraged and pays a monthly dividend, currently yielding approximately 6.95%. The distribution has been increased after several reductions.

The Flaherty & Crumrine Dynamic Preferred and Income Fund has suffered losses over the past two years due to high leverage and had to cut distributions repeatedly. DFP's current yield of 6.72% is not impressive compared to other fixed-income funds. The fund's recent performance has been strong, but other preferred stock funds have outperformed it.