Why Dividends

TGA-GIA Capital Management offers High Quality, High Yield Dividend Account(s).  Through the firms fixed income securities team, we Provide superlative, consistent, income that exceeds most traditional fixed accounts, while emphasizing the return of principle and liquidity for personal or retirement plan accounts. 

Simply, TGA-GIA Capital Management expertise since1982 utilizes; Fixed Income and Preferred stock, also called preferred shares, preference shares, or simply preferreds, is a special equity security that has properties of both an equity and a debt instrument and is generally considered a hybrid instrument. Preferreds are senior (i.e. higher ranking) to common stock.

In general, preferreds have preference to dividends payments. Almost all preferred shares have a negotiated fixed dividend amount. The dividend is usually specified as a percentage of the par value or as a fixed amount. For example Pacific Gas & Electric 6% Series A preferred. sometimes, dividends on preferred shares may be negotiated as floating i.e. may change according to a benchmark interest rate index such as LIBOR.

In addition to the straight preferred, as just described, there is great diversity in the preferred  market. Additional types of preferred stock include: Prior Preferred Stock, Preference Preferred Stock, Convertible Preferred Stock, Cumulative preferred stock, Participating Preferred Stock  These preferred issues offer the holders the opportunity to receive extra dividends if the company achieves some predetermined financial goals. The investors who purchased these stocks receive their regular dividend regardless of how well or how poorly the company performs, assuming the company does well enough to make the annual dividend payments. If the company achieves predetermined sales, earnings or profitability goals, the investors receive an additional dividend.  Monthly income preferred stock—A combination of preferred stock and subordinated debt. 

Advantages of preferreds posted by some advisers include higher yields and tax advantages (currently yield some 2% more than 10-year Treasuries, rank ahead of common stock, Dividends are taxable at a maximum 20% rather than at ordinary income rates, as in the case of bond interest).

Investors in preferred shares are generally those who wish to hold fixed-income investments in a taxable portfolio. Preferential tax treatment of dividend income, as opposed to interest income, may in many cases result in a greater after-tax return than might be achieved with bonds.

With a qualified dividend tax of 20% compared to a top ordinary marginal tax rate of 35%,[15] $1 of dividend income taxed at these rates provides the same after-tax income as approximately $1.30 in interest.

The size of the preferred stock market in the United States has been estimated as USD$100-billion, as of early 2008, compared to USD$9.5 trillion for equities and USD$4.0 trillion for bonds.[16]    The issuance of preferred stock began in the late 1800’s.

Investing in Preferred Stocks - What are the advantages of investing in preferred stocks?