PFFR: An 8% Yield With Incremental Interest Rate Optionality
The InfraCap REIT Preferred ETF (PFFR) offers an ~8% dividend yield with a moderate expense ratio of 0.45%, primarily driven by its holdings in REIT preferred shares. Despite a low five-year CAGR of 1.3% due to interest rate pressures, the fund presents potential for capital appreciation if rates decline. PFFR is currently rated a buy for income-focused investors, though sector concentration and liquidity risks warrant careful position sizing. The yield sits approximately 3.58% above the risk-free rate, adding to its relative attractiveness.
- ▪PFFR currently offers a ~7.94% SEC yield and an ~8.3% distribution yield.
- ▪The ETF tracks the Indxx REIT Preferred Stock Index and is passively managed.
- ▪Its five-year CAGR return was ~1.3%, largely impacted by interest rate-driven price declines rather than credit issues.
- ▪PFFR is considered a buy for income investors but carries sector-specific and liquidity risks.
- ▪The current dividend yield exceeds the risk-free rate by approximately 3.58%.
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