Preferred stocks have long been popular with individual investors due to ample yields, tax benefits, liquidity, and high credit quality.

Now the $350 billion market has gotten more appealing with the selloff in fixed income, which has lifted the yield on the 30-year Treasury bond to a recent 5.25% after hitting its highest level since 2007.

Preferred issues from leading banks like JPMorgan Chase, Bank of America, and Wells Fargo now yield about 6.5%, up almost a half percentage point since the start of 2026. Most preferreds are perpetual, meaning they have no maturity dates. That makes them sensitive, like the 30-year Treasury bond, to changes in long-term rates.

"The main appeal of preferred stock is high, tax-advantaged income," says Elaine Zaharis-Nikas, head of fixed income and preferred securities at Cohen & Steers, one of the largest preferred managers.

Credit quality is strong in part because banks, the largest issuers, have rarely been in better shape over the past few decades. "Bank profitability is strong, and capital and asset quality are high," she says.

Investors can buy individual preferred issues that trade like common stock on the New York Stock Exchange or buy preferred mutual funds or exchange-traded funds. The largest ETF is the $13 billion iShares Preferred & Income Securities, now yielding about 5.5%.

Preferred is a senior form of equity, making it riskier than debt and more secure than common stock.

Issuers are loath to suspend preferred dividends, although they can do so without triggering a default. Most companies can't pay common dividends unless they are paying preferred dividends. Bank preferreds generally have investment-grade credit ratings-with Citigroup being an exception based on its Moody's and S&P ratings.

Preferred dividends are taxed favorably, like common-stock dividends, at a top federal rate of 20%, while corporate bond interest is taxed more onerously at federal income-tax rates as high as 37%.

Many individual investors are attracted to the so-called retail preferred market, which consists of securities that usually have a face value of $25 a share and trade on the NYSE and Nasdaq with their own ticker symbols. This makes for better liquidity and transparency than corporate debt, the vast majority of which trades in opaque over-the-counter markets dominated by institutional investors.

The retail market totals about $100 billion, while the so-called institutional market stands at $250 billion. The institutional preferreds, which have $1,000 face values. are usually traded over the counter and can be accessed by retail investors through major brokerage firms.

Many high-net-worth financial advisors like the institutional market for their clients because the structure of those preferreds can offer some advantages, including periodic rate adjustments.

Many retail preferreds have been hit hard by the rise in interest rates over the past several years, since they are perpetual securities with high durations-bondspeak for rate sensitivity.

The upshot now is that investors now can buy many preferreds at deeply discounted prices to their face value of $25.

Here are some representative issues. JPMorgan's 4.2% series M issue trades around $16.50 for a yield of 6.30%, Bank of America's 5.5% series N issue trades around $19 for a 6.50% yield, and Wells Fargo's 4.75% series Z trades around $18 for a 6.6% yield. These preferreds are rate-sensitive and can swing in price. The JPMorgan issue, for instance, is down about 10% this year. But if rates fall, it could rise nicely in price.

Zaharis-Nikas favors the institutional preferred market, where many issues have an initial yield for five years-with the rate then resetting at a spread above the five-year Treasury note for another five years. The issuer has the option to redeem the securities at face value after five years. American Express recently issued this type of preferred at an initial yield of 6.45%.

Cohen & Steers' funds, including the $7 billion Cohen & Steers Preferred Securities & Income fund as well as the shorter-maturity Cohen & Steers Limited Duration Preferred and Income closed-end fund, have exposure to the institutional market, including Citigroup issues.

The firm also favors preferreds from foreign banks like BNP Paribas and HSBC that yield slightly more than preferreds from their U.S. counterparts. The Cohen & Steers closed-end fund has a high 7.6% yield due in part to leverage.

Real estate investment trusts also issue preferreds, led by $Public Storage(PSA-N)$ as well as New York commercial real estate owner $Vornado Realty Trust(VNO-N)$. Vornado's 5.4% issue trades around $17.75 for a yield of about 7.5%.

REIT preferreds don't benefit from the preferential 20% federal tax rate on dividends, but investors get a tax break since they can exclude 20% of their dividends from their gross income, according to New York tax expert Robert Willens. "Thus, a taxpayer in the 37% tax bracket is taxed on REIT dividends at an effective rate of 29.6%," he says.

Bitcoin holder Strategy is one of the larger and more controversial preferred issuers with $15 billion of outstanding securities. Its preferreds carry yields as high as 14%, reflecting the company's lack of income and its need to fund some $1.5 billion in dividends with equity issuance or Bitcoin sales.

Barron's has argued that for those bullish on Bitcoin, the Strategy preferred looks appealing, including its largest issue, known as Stretch, trading on the Nasdaq under the ticker STRC. It trades around $95 (below its face value of $100) and now yields about 12.5%. There also are some tax benefits because the Strategy preferred dividends are treated as a return of capital.

There have been several large mandatory convertible preferred issues in the past year, including a twin offering totaling $16.75 billion from Alphabet in June traded under the tickers GOOGM and GOOGN.

The Alphabet issues carry a dividend rate of 6.25% and trade just below their offering price of $50. They amount to yield-enhanced common stock since the company plans to convert them into common stock in three years.

Then there are so-called baby bonds, which are corporate debt issues that trade like preferred stock and have $25 face values. Insurer W.R. Berkley has issued several of them and they now carry high yields. Berkley's 4.125% subordinated debt due in 2061 trades around $14.60 for a 7.5% yield.

Berkley is a well-run property and casualty insurer with a $25 billion market value, and its investment-grade bonds look safe.