Picking up preferred stocks jim jubak

Picking up preferred stocks
The bond world can be a strange and alien one for anyone who has invested mostly in stocks. That's why so many people buy their bonds through bond funds and bond exchange-traded funds. But since funds and ETFs don't hold their portfolios to maturity -- they're constantly rolling over their holdings -- my strategy won't work with bond funds and ETFs.

Preferred stocks are a good alternative if you find the world of bonds daunting -- and even if you don't. For example, I bought preferred shares of W.R. Berkley (WRB-A, news, msgs) in December and January because I think this very conservative insurer is a survivor. The preferred shares were trading 23% below their high of May 6, 2008, and the shares pay a yield of 8.88%. I'm adding these shares to Jubak's Picks with this column. You'll find more detail on W.R. Berkley, including some comments on its most recent earnings report, in my "buy" on the next page.

Similarly, in the energy sector you could buy the preferred shares of Chesapeake Energy with a 9.56% yield. I sold the common shares of the company out of Jubak's Picks because I wasn't getting paid while I waited for the turn in natural-gas prices, but the preferred stock certainly removes that obstacle.