Preferred Stocks?

Physician's Money Digest, September15 2003, Volume 10, Issue 17

A Wall Street Journal

Preferred stocks act a lot like bonds,but the payoff is often in the form of adividend, which is making them a hotcommodity since the new tax lawdropped tax rates on dividend income.Individual preferred stocks aren't easyto buy or to track, however, which iswhy Wall Street is answering investorbuying fever by trotting out no fewerthan 13 mutual funds that concentrateon preferred stocks. Already sportingyields of around 8% or more, preferred-stock funds have suddenlybecome even more attractive with theprospect of lower tax rates on thosegains. articlewarns, however, that many preferred-stockissues don't qualify for thereduced tax on dividends because theyare technically trusts that pay interest,which is taxed at marginal income taxrates as high as 35%.