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

The market historically climbs in election years. So, what does that mean for your portfolio? We examine how politics and the market relate. I recommend focusing on interest rates and economic cycles over politics.

Traditional pensions are rare, defensive income investments crucial for retirees. Fixed income offers multi-year high yields, and the market is yet to appreciate its value proposition in a low-interest rate economy. We discuss two monthly paying diversified funds with yields up to 7%.

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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.

Flaherty & Crumrine Dynamic Preferred and Income Fund's distribution yield is no longer impressive compared to other fixed-income closed-end funds. The DFP closed-end fund's performance over the past few weeks has been strong, but it may have been run up too far. The fund's use of leverage and declining distribution raise concerns about its sustainability and ability to generate returns.

Preferred stocks offer higher yields and greater income reliability. Today, we will discuss preferred stocks in general for those of you who are new to them, or for the old hands who might need a refresher. Higher interest rates have created a buying opportunity for preferred securities, and we provide a few picks to maximize your retirement income.