Quick Glance at Preferred Shares

As I calculated earlier, I found that I should be looking for 7.75% return on ordinary income, 6.64% on capital gains and 5.64% on eligible dividends. So, how realistic are these figures in the short term? Well, I figure with things like the latest BMO offering at 5.8% is a decent indicator. The question is, do I want to incur the risk associated with preferred shares. As I understand it, the company could decide not to declare dividends, perceived risk of the company could increase and result in a capital loss, when interest rates go up, current issues will appear less desirable and the price will fall. Of course, the thing is, that when interest rates start going up, economic outlook should be somewhat improved and there'll be less perceived risk in the issuers, maybe those two effects will balance out. So take a chance and roll the dice?
Before I gamble, I always check the odds. There's trying to predict the weather and trying to predict the seasons. The information that I have available to me include the company's credit rating, the financial statements, performance of the common stock, and adviser commentary.
My potential losses at worst, I loose what I invest. I feel that the likelihood of this happening is rather small given the tools that are available to me. However, the Bear Stears collapse was pretty much a surprise to everyone. The effect of an event like this can also be reduced by spreading the risk around so that if one goes under, it isn't too significant of a portion of my investments.
A next step up from that, dividends are suspended. The company can then die a slow death and people won't notice for a while, or it can be just temporary. As I understand it, suspending dividends on preferred shares isn't something a company does lightly. They're usually in trouble at that point. If this happens, I suspect that the result will be largely the same as the above scenario, only a portion of my investment will be recoverable instead of the whole thing. The whole thing could also blow over and see dividends resume with a battered share price.
Share prices could fall. A portion of my capital will be unrecoverable, but income will continue. It might scare me in the short term if the drop is significant, but odds are, I'll be ok with things once the price stabilizes.
This feels like quite a bit of risk to take on for 0.16%. If this were all I was looking at, I'd step away. Though the story of my life isn't about avoiding risk. Anyone who's tried playing blackjack or poker seriously knows that it's about evaluating risk and making safe bets, not avoiding it. Maybe if the bank makes another 0.25% drop in interest rates, it'll make things more attractive. I see the real possibility for another drop in interest rates. Before making blanket decisions based on one issue, what else is out there? Not that I'm questioning the stability of the Bank of Montreal or anything like that.
Hymas put together a pretty good information table at www.prefinfo.com, Hymas also maintains a commentary at www.prefblog.com. I can also hunt down what else is out there using the Dominion Bond Rating Service, and it'll rate the financial health of the company for me too. Newspaper stock listings also seem to be a good place to look for just figuring out what's out there. I'm going to refrain from commenting on specific issues.