Hi!  This is part of a mini series that I am making where I go over some investments I made over the past two years and go over the outcomes and what I learned.

The Investment

The investment that I want to talk about today is my approximately $5000 JUNK preferred stock investment.  By Junk, I mean that I foolhardily invested in company’s that were issuing high YIELD preferred stock.  The yield was high because the companies issuing the preferred stock were not very solid – meaning they had a very real risk of default.

The Result

Anyways, I basically took around $5000 and split it into 10 groups of $500 and bought 10 different stocks.

Table of preferred shares

Junk Preferred Stock


So as you can see from the table above, I got screwed hard on two of the stocks.  GST+B went bankrupt and it looks like RHE/PRA is about to go bankrupt as well.

stock going to zero


However, even taking into account those two losses, I still ended up profiting about $400.

Closing Thoughts

Normally this would be a very shitty return for spending two years in the market, but we also need to take into account that I was earning tons of dividends on these stocks – the average yield was around 10%.  So, that means that my total return is probably closer to around $1300.  That’s not bad at all for a 2 year investment.

However, I would certainly NOT RECOMMEND this kind of investment to anyone.  It is super risky – one of my stocks went full on bankrupt!  Furthermore, there is a real cost of purchasing these shares.  You need to make 10 trades which can cost you up to $50 – so this isn’t an investment that is really worthwhile unless you are investing ALOT of money.

However, I would certainly do it again if I could somehow invest in individual preferred stocks without having to pay a trading fee.

Overall, it was a fun experience, and I hope to mess around with preferred stock again some day.