A 10-year Treasury fund yields 1.8 percent. CDs offer little. In some parts of Europe you pay the bank to hold your money. It’s a low- or no-return world.

What’s a saver to do? Look at preferred stocks.

A preferred stock is a “hybrid” security with characteristics of both stocks and bonds. For example, preferreds represent ownership in a company, like a common stock, but usually pay regular fixed dividends, like bonds pay interest. Most issues currently yield around 6 percent.

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Preferred stocks can decline if interest rates rise or if there is a threat that the company can’t pay its dividend.

Rates may rise some, but not enough to threaten most preferred stocks. Today’s risk is limited to the quality of the company. That is called credit risk.

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One can diversify among preferred stocks by buying the popular iShares Preferred Stocks ETF (PFF). As much as I like ETFs, one can do far better buying individual issues.

If you want to invest for income and stability, buy investment grade and currently callable preferreds near their $25 par value.

Why buy preferreds that are callable? Many companies want to call their debt or preferreds at their par value so they can refinance at lower rates. The threat of being called puts a price floor on the preferreds.

Here are two of my favorites:

My largest managed account holding is HSBC Adjustable Rate Series D Preferred. This investment-grade security is tied to the Treasury market, which is far more attractive than other adjustable securities that are tied to LIBOR. This security was around $25 when I wrote about it on 4/18/13, 12/12/13, and 8/7/14. It will likely be around $25 at the end of the year. It yields 4.5 percent.

RenaissanceRe called half of its preferred ‘C’ issue and I’m sure they’d love to call the other half. I’m a buyer of this security at or below $25. With the threat of a call, it won’t fall below $25 by much, even if interest rates rise. Renaissance Re Preferred C yields 6.1 percent.

In this near zero interest rate environment, one can still receive an attractive return with relative stability. It’s unconventional, but preferred stocks like those listed above play an important role in my client’s portfolios.

David Vomund is an Incline Village-based fee-only money manager. Information is found at http://www.ETFportfolios.net or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.