Mandatories generally pay better than regular preferreds, but are not eligible for favorable dividend tax treatment.
FORBES: Income Funds 101
2.
Even though investors have not received dividends, they may still be required to pay taxes on the dividends, and trust preferreds are not eligible for the lower dividend tax rate.
FORBES: Income Funds 101
3.
Those seeking tax-sheltered returns can do better, at least until 2011, by buying preferred stocks eligible for the 15% dividend tax rate.