If we're looking at long-term future return of stocks (at current valuations) somewhere around 4% real, would it make sense to allocate a percentage of equity holdings in preferred stock?

I read an interesting post related to low equity risk premiums yesterday. It was linked to this article- http://ift.tt/2orezBw

If we use his assumption - if current valuations hold (and we're looking forward to low equity risk premiums) he estimates that long-term future returns will be no more than 4% real.

My question, would it not make sense to allocate some percentage of equity holdings to preferred stocks then? PFF yields around 5.75%. Assuming preferred stocks are less prone to the same volatility SPY, you're looking at an additional 1.75% expected return with less risk. Am I way off base?

Submitted December 03, 2017 at 11:49AM by PennTech http://ift.tt/2A0rcty