Taxable Preferred Securities

Dividends are generally taxed at a lower rate than regular income. However, not all dividends get this preferential treatment.

Like...how your buddy was a bouncer at a popular club and said he'd get you in, despite the line. But then you show up and...someone else is working that night. You end up spending a few hours in line on the street, before finally heading home to watch Netflix.

That situation describes the taxable preferred securities. Left out in the cold. The cash they generate is treated like normal income, not like a dividend. Thus, they are preferred securities that remain taxable...i.e. taxable preferred securities.

But don't feel so bad for those poor taxable preferred securities, spending their Friday nights home alone. They usually have a higher yield to make up for the unfavorable tax status. So they don't end up so alone after all.