Most newbie investors think that stocks are the best — and sometimes, the only — choice for investment. Generally speaking, stocks are good investment options, but not all investors will find stocks appropriate for their risk profile or investment goals.
Differences of Preferred Stocks vs. Common Stocks vs. Bonds
For most people, bonds and equity (common stock) are the usual options for investment. We have already discussed these two asset classes lengthily. For a refresher course, here’s our primer on Stock Trading and Investing while here’s our tutorial on Bonds and Fixed Income.
List of Preferred Stocks traded in the PSE
Stocks may be “sexy” but your investment portfolio should never be composed of stocks alone. To understand why, read our article on The Importance of Diversification in Investing.
Aside from stocks, other investment assets that may be included in one’s portfolio include Bonds and other fixed income instruments; Pooled investment funds such Mutual Funds, Exchange Traded Funds or Unit Investment Trust Funds; Real Estate; Time Deposit Accounts; and Gold and other precious commodities, among others.
Another type of investment that can be added to one’s portfolio is Preferred Shares and this is what we will discuss in this post. Previously, we wrote a few introductory articles about Preferred Shares to help you understand this type of investment.
Ayala Land Homestarter Bond with ALI bonus credit
Ayala Land Inc. (ALI) is offering a new type of bond that will give investors fixed income, plus a bonus credit if and when the investor decides to purchase an Ayala Land residential property.
The Ayala Land Homestarter Bond pays a 5% fixed interest rate per year — decent return from a relatively stable company — but make sure you understand all the terms and conditions of the investment, lest you eventually be convinced to buy a property that you never planned.
FGEN’s 7.808% Preferred Shares
Here’s an investment option for those interested in diversifying their portfolio.
First Gen Corporation (FGEN), the Lopez-owned independent power producer, is issuing to the public up to 100 million Series G perpetual preferred shares for P100 each. The shares guarantee a fixed dividend rate of 7.808% per annum.
What are Preferred Shares?
Ayala Corp’s “Class A” Preferred Shares
Ayala Corporation, the country’s largest conglomerate, will be issuing a total of 12 million preferred “Class A “shares for P500 each. Proceeds from the issue will be used to fund the company’s investments in business process outsourcing (BPO) and overseas real estate projects.
Unlike owners of common shares, preferred stockholders do not have voting rights but are the first to get paid in case a company is liquidated.
Ayala Corp (Stock Code: AC)‘s Preferred Shares will pay a fixed dividend rate of 8.88% per annum. Minimum subscription is 100 shares and succeeding placements must be in multiples of 20 shares.