Assessing the Strategic Value of Cohen & Steers Select Preferred and Income Fund's Dividend Consistency

For income-focused investors, the allure of consistent dividends often hinges on a fund's ability to balance yield preservation with risk management. Cohen & Steers Select Preferred and Income Fund (PSF) has carved a niche in this space, offering a monthly dividend of $0.126 per share—a rate that has remained unchanged since June 20232025 Credit Outlook: On Firm Ground, Despite Shifting Political Sands^[2]. This stability, despite macroeconomic headwinds, underscores the fund's strategic positioning in the preferred stock and income securities market.

The Dividend's Strategic Foundation

PSF's dividend consistency is underpinned by its disciplined leverage strategy and portfolio composition. The fund employs leverage of up to 33.33% of its managed assets, a level designed to amplify yield potential without overexposing the fund to volatilityCohen & Steers Select Preferred & Inc:PSF - CEF Connect^[3]. As of September 2025, its effective leverage stood at 32.54%, with $129 million in debt2025 Credit Outlook: On Firm Ground, Despite Shifting Political Sands^[2]. This moderate use of leverage allows PSF to maintain a high current income profile while mitigating the risks associated with excessive borrowing—a critical factor in an era of rising interest rates.

The fund's portfolio further reinforces this strategy. As of June 30, 2025, 87.44% of its assets were allocated to corporate securities, with 55.43% in corporate bonds and 30.14% in preferred stocksCohen & Steers Select Preferred & Inc:PSF - CEF Connect^[3]. These holdings are predominantly investment-grade, with an average coupon of 5.92%Cohen & Steers Select Preferred & Inc:PSF - CEF Connect^[3]. This focus on high-quality, fixed-income instruments ensures a steady cash flow to support the $0.126 monthly payout, even as broader market yields fluctuate.

Yield Resilience in a Shifting Landscape

PSF's 7.19% yield as of September 2025Cohen & Steers Select Preferred and Income Fund Inc (PSF) Stock^[1] places it above the average of the bottom 25% of US dividend payers but below the top 25% of Financial Services sector peersCohen & Steers Select Preferred and Income Fund Inc (PSF) Stock^[1]. While its dividend growth rate has stagnated (0% over the past year and -2.27% over three yearsCohen & Steers Select Preferred and Income Fund Inc (PSF) Stock^[1]), this reflects a deliberate emphasis on stability over growth. For retirees and conservative income seekers, this approach is a double-edged sword: it limits upside potential but provides a reliable, inflation-protected stream of cash.

The fund's resilience is further bolstered by the broader credit environment. The 2025 credit outlook highlights robust fundamentals in BBB and BB-rated sectors, which comprise a significant portion of PSF's holdings2025 Credit Outlook: On Firm Ground, Despite Shifting Political Sands^[2]. These ratings, characterized by strong EBITDA margins and interest coverage ratios, suggest that the fund's underlying assets are less vulnerable to economic downturns. This aligns with PSF's secondary objective of capital appreciation, as preferred stocks and investment-grade bonds tend to retain value during market corrections.

Risks and Considerations

While PSF's strategy is compelling, investors must weigh its reliance on leverage and exposure to policy shifts. The fund's 32.54% leverage ratio, though moderate, amplifies sensitivity to interest rate hikes. Additionally, protectionist policies such as tariffs could disrupt supply chains, particularly for firms with international operations—a risk given the global nature of many preferred stock issuers2025 Credit Outlook: On Firm Ground, Despite Shifting Political Sands^[2].

Moreover, the fund's benchmarking against indices like the BofA Merrill Lynch Fixed Rate Preferred IndexCohen & Steers Select Preferred & Inc:PSF - CEF Connect^[3] highlights its low correlation to traditional stocks and bonds. This diversification benefit is valuable in a volatile market but may limit returns during periods of broad equity or bond market outperformance.

Conclusion: A Pillar of Income Stability

In a landscape where dividend cuts and yield erosion are growing concerns, PSF's unwavering $0.126 monthly payout offers a rare combination of predictability and resilience. Its strategic use of leverage, high-quality portfolio, and alignment with favorable credit trends position it as a compelling option for investors prioritizing income security over aggressive growth. However, the fund's performance will ultimately depend on its ability to navigate macroeconomic shifts and maintain its current yield in an evolving interest rate environment.