Dear Investor,

It’s different this time, truly.

I am speaking, of course, of the 2020 stock market crash. One effect of the pandemic-triggered market drop was large declines for every type of high-yield asset. Declines hit every income category, no matter the level of risk or safety.

That was a one-time occurrence, and during the next stock market correction, the safer high-yield categories will be a great place to be invested.

Read on for the best way to get in on them today…

The February – March 2020 bear market took down high-yield investments across the spectrum. BDCs, REITs, MLPs, closed-end funds (CEFs), and even preferred stocks quickly dropped by 60% to 90%.

For income-focused investors like us, it was a brutal time.

The widespread carnage of high-yield investments led me to believe that the usual large players and hedge funds with leveraged bets on high-yield were forced to liquidate their positions at any cost.

I have no proof, but it’s the only scenario that makes sense.

Whoever made the leveraged bets on these sectors was severely hurt, and I doubt they have re-entered the trade.

But next time really will be different. Regular market downturns don’t work the way the Covid crash did.

Preferred shares are an easy choice for a place to ride out a stock market correction and earn a decent return while doing so. Preferred stocks pay fixed dividends that must be paid if the company pays common share dividends.

Most preferred stocks have a $25 par value. These shares can trade at discounts or premiums to par. The dividend rate is based on par, so a 6.5% coupon preferred share will pay dividends of $0.40625 per share per quarter.

Most preferred issues can be called in at some date. Called shares will be redeemed at par plus any accrued interest.

You can find all the U.S.-listed preferred stocks here: https://www.stockmarketmba.com/listofpreferredstocks.php

When researching individual preferred stocks, consider these factors:

• Preferably go for preferreds trading below par, but definitely none trading for more than $25.50.
• Review the first call date. Even if preferred stocks become callable, that doesn’t mean they will be called.
• Make sure the company pays common stock dividends and will continue to do so. Common share dividends protect preferred stock dividends.
• Look for preferred stocks with current yields of 6.5% to 7.5%. You can find ones with attractive yields that meet the previous criteria.

My recommended investments in my Dividend Hunter premium service include a dozen select preferred issues that meet these criteria. To see how to get access to the full list – as well as 20+ other low-risk, high-yield dividend stocks that have done amazingly well after the Covid crash – click here.

The Virtus InfraCap U.S. Preferred Stock ETF (PFFA) offers another way to invest in preferreds. The ETF pays monthly dividends with a 7.7% yield.

During the next market correction, look to buy quality preferred stocks or PFFA when the share prices drop into the low $20s.