7 Best Preferred Stock ETFs That Offer High and Stable Dividends

Preferred stock isn’t as widely discussed as common shares or bonds, but for income-oriented investors, it can be a compelling source of monthly or quarterly dividends that are typically higher than what traditional bonds or blue-chip stocks offer. Preferred shares are a hybrid security that behave like bonds in paying fixed dividends, yet sit higher than bonds in a company’s capital structure, often offering a balance of yield and stability. ETFs that focus on preferred stock pool these individual securities into diversified baskets, making them easier and more efficient to own than trying to buy dozens of preferred issues yourself.

Here’s a look at some of the best preferred stock ETFs for investors seeking high, relatively stable dividend income, with context on why each may be worth considering.

Why Preferred Stock ETFs Matter for Income Investors

Preferred stocks typically pay fixed dividends similar to bond coupon payments and often yield significantly more than the broader stock market or high-quality corporate bonds. Historical data shows yields in the 5 %–7 %+ range are common among preferreds, depending on interest rates and market conditions.

Unlike direct bond investing, preferred stock dividends can be suspended (although this is rare for high-quality issuers) and don’t carry voting rights like common stocks, but they do offer:

Higher income potential than many traditional fixed-income options

Diversification benefit due to unique credit and interest rate sensitivity

Monthly dividend payments, which can enhance cash flow for retirees or income-focused portfolios

ETFs make this space accessible and efficient by handling diversification, trading logistics, and reinvestment ideal for investors who want exposure without screening individual issues.

Top Preferred Stock ETFs With Attractive Yield and Stability

iShares Preferred and Income Securities ETF (PFF)

The largest and most liquid preferred stock ETF is often the first choice for income investors. PFF tracks the ICE Exchange-Listed Preferred & Hybrid Securities Index and holds several hundred preferred stocks from major U.S. issuers, especially in the financial sector. Its size and liquidity make it a reliable core holding for preferred exposure. ($14+ billion in assets under management as of late 2025).

Why PFF is noteworthy:

Strong current dividend yields (6 % range).

Deep liquidity and tight bid-ask spreads.

Broad diversification across hundreds of preferred stocks.

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Consideration: Heavy concentration in the financial sector banks and insurers which can skew performance if that sector underperforms.

Invesco Preferred ETF (PGX)

PGX uses an index sampling method focused on fixed-rate preferred securities that are dollar-denominated and generally higher credit quality. Compared with some peers, this fund tends to lean toward more investment-grade preferreds, offering a slightly more conservative profile for income investors.

Why PGX stands out:

Competitive yields around the 5.8 %–6 % range.

Lower volatility relative to some preferred ETFs due to its quality tilt.

Strong trading volume, making it easy to enter or exit positions.

Good for: Investors who want preferred exposure but with slightly higher credit quality standards than some broader funds.

First Trust Preferred Securities & Income ETF (FPE)

FPE blends preferred stocks with select convertibles and hybrid securities, giving it a somewhat different risk/return profile. The combination aims to provide income with an element of total return not just steady dividends.

What makes FPE appealing:

Dividend yield in the 5.7 % range.

A more flexible, diversified underlying basket than plain preferreds.

Historically attractive performance during recovery phases due to growth components.

Best fit: Investors who want a blend of fixed income and equity-like return potential, with consistent income.

Global X U.S. Preferred ETF (PFFD)

PFFD is notable for one of the lowest expense ratios among popular preferred ETFs, which helps enhance net income for investors. It invests in U.S. preferred securities and targets a higher income payout relative to some peers.

Key benefits:

Expense ratio significantly lower than many alternatives.

Yield that’s typically in the high-5 % to low-6 % range.

Broad exposure across preferred shares, helping boost diversification.

Good for: Cost-conscious income investors who want a straightforward preferred ETF without high fees.

SPDR Wells Fargo Preferred Stock ETF (PSK)

PSK’s focus is on investment-grade preferred securities, and it often employs a diversified weighting methodology to avoid overconcentration in any single issuer. This can reduce security-specific risk relative to some sector-heavy funds.

Why PSK is notable:

Dividend yields around mid-to-high 5 % territory.

Less concentration risk due to individual holding limits.

Solid choice for investors seeking stable income with broad preferred exposure.

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VanEck Vectors Preferred SecuritiesexFinancials ETF (PFXF)

PFXF takes a slightly different approach by excluding financial preferred securities (a segment historically dominant in preferred ETFs) and seeking broader industry exposure including utilities, REITs, and other sectors. This can reduce correlation with interest rate cycles tied to bank earnings.

Strengths of PFXF:

Yields that have been competitive within the preferred ETF space.

Broader sector diversification beyond financials.

Effective for investors wanting less banking sector concentration.

Worth knowing: This strategy can perform differently than traditional financial-heavy preferred ETFs, so it’s especially valuable to investors mindful of sector risk.

Other Preferred ETF Plays to Watch

Beyond the big, widely held funds listed above, there are niche options worth knowing:

Global X SuperIncome Preferred ETF (SPFF) offers a very high yield by selecting preferred shares with stronger income profiles.

InfraCap REIT Preferred ETF (PFFR) blends preferred stock exposure with the real estate sector, often delivering higher yields but with sector-specific dynamics.

These may be best suited for experienced income investors who have a clear view of rate environments and sector trends.

How Preferred ETFs Fit in a Portfolio

Preferred stock ETFs aren’t usually core holdings like broad stock or bond index funds, but they can play a valuable role:

Income generation: They often yield more than long-term Treasuries and corporate bonds.

Diversification: Preferreds behave differently than common equities and typical bonds, which can help smooth portfolio volatility.

Liquidity: ETF structure means you can easily buy or sell shares throughout market hours, unlike some closed-end funds or individual illiquid issues.

Keep in mind that preferred ETFs are sensitive to interest rate movements when yields rise, preferred share prices can fall, and vice versa, similar to bonds. This makes preferred ETFs fixed income-like in behavior, though with equity characteristics tied to dividend payments and credit risk.

Takeaway

Preferred stock ETFs can be a strong choice for income-seeking investors who want higher payouts than traditional bonds or dividend stock ETFs provide, without taking on the idiosyncratic risk of individual preferred issues. That said, they’re best owned with an understanding of how interest rates and sector concentration can influence performance.

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Each fund offers a slightly different balance of yield, risk, and sector exposure. As with all income-oriented strategies, pairing preferred ETFs with broad diversification and an eye on overall asset allocation can help you make steady, informed progress toward your financial goals.

We believe the information in this material is reliable, but we cannot guarantee its accuracy or completeness. The opinions, estimates, and strategies shared reflect the author’s judgment based on current market conditions and may change without notice.

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