in 2 stable companies what is the advantage of a lower yld preferance share?

Answer 1

What is "preferance share"? Are you referring to preferred stock shares?

Either way, if a lower yield has a preference it lay along two directions. First, if we are talking common stock, then that lower dividend yield has the advantage of leaving more money in the company coffers to do the company work. This minimizes the need to borrow money. Which leads to the second.

Second, if you are talking about preferred shares, a sort of middle ground between bonds and common stock shares, but without the latter's voting representation at stockholder meetings, then a lower yield means a lower likelihood of price depreciation than the higher yield preferred shares will likely suffer if interest rates decline. As for an income vehicle, obviously the higher yielding issues of preferred stocks will gain the bigger period payoffs. But when general interest rates fluctuate, the price of the stock (preferreds have a fixed payout, so if the price of the share changes, the yield changes), then higher yielding shares will suffer the greater range of fluctuation as the market reestablishes a parity price of the principle of your investment.

Answer 2

yield is also a function of risk. stable or not, there are risks. verify credit and the time constraints on the pref stock. try quantumonline.com to get the important info on pref stocks. its free.