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Preferred Income Portfolio

The investment objective of TIA's Preferred Income Portfolio (PIP) is three-fold: 1) to provide a taxable fixed income alternative through fixed quarterly dividends, 2) to manage the call protection and duration risk,  and 3) to produce "equity-like" total returns through the superior historical yield spreads to US Government Bonds existing in the preferred stock market.

There are several components in TIA's preferred stock philosophy:

  • High quality marketable preferred stocks (NYSE)
  • Superior historical yield spread to 30 year US Government Bond
  • $25 par value
  • Quarterly dividend payments
  • Less than 5 years call protection

The typical preferred stock portfolio will consist of a diversified portfolio of 20-25 stocks. TIA maintains and monitors diversification guidelines on both a company and industry basis.

For more detail as well as commentary on current conditions, the following newsletters may be of interest:

2018-01-15 PIP Quarterly Year End Update

Posted on January 29, 2018

  January 15, 2018 Dear Mr. and Mrs. Smith, The Preferred Income Portfolio (PIP) marked its 9th year in 2017. PIP was created in 2008 as the Federal Reserve reduced interest rates. TIA know its clients needed quality consistent income from their fixed income investments along with lower volatility than the stock market. Investing in $25 preferred shares provided the needed income with their 6…

2017-10-15 PIP Quarterly Update

Posted on November 08, 2017

October 15, 2017 Dear Mr. and Mrs. Smith, I drive a pickup truck. I drove my last pickup 15 years. Toward the end, it started sending me signals that it was going to require more expense to keep it functioning than I was willing to spend, so I traded it off. My new truck has seating for 5, all the luxury you’d like in the cab, and a bed suitable for hauling about anything a suburbanite could ima…

2017-07-15 PIP Quarterly Update

Posted on July 17, 2017

July 15, 2017 Dear Mr. and Mrs. Smith, The Preferred Income Portfolio (PIP) had a very solid second quarter of 2017. Annual income remains between 6% and 7% and even though interest rates rose modestly in the quarter our average security values also increased. 2017 is a transitional year for PIP. We started the year with 12 issues callable in the year. During the first half of the year we had 7…

2017-04-15 PIP Quarterly Update

Posted on April 27, 2017

Dear Mr. and Mrs. Smith, At the risk of sounding like a broken record, the Preferred Income Portfolio (PIP) had an excellent first quarter of 2017. We continue to enjoy between 6% and 7% annual income and this quarter our security values rose over 1% as 30-year US Treasury rates fell modestly in the quarter. PIP remains key to our Bridge to Higher Interest Rates (Bridge) strategy. We focus on hi…

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