These preferreds are entitled to their full dividend before the common shareholders of the REIT get a penny of dividends.

Furthermore, if financial problems should force the issuer temporarily to suspend the preferred dividend, all back dividends would have to be paid to the preferred shareholders before the common shareholders could receive anything.

Best of all, the REIT is generating enough cash flow to pay the preferred dividends four times over. To me, that's a very substantial margin of safety.

High-Yielding REIT to Buy Now

The REIT I'm talking about is Public Storage, which owns and operates the ubiquitous self-storage centers with the orange sign.

Founder/Chairman B. Wayne Hughes, in charge since 1972, insists on low levels of debt — an important source of security for both common and preferred shareholders. Self-storage is also a fairly recession-resistant business; occupancy at Public Storage's facilities held at 87.8% on December 31, 2008, down only 0.6% from a year earlier.

Public Storage has 17 different series of preferred stock outstanding, but all enjoy the same priority claim on the company's cash flow. Thus, you should generally buy whatever issue happens to be priced at the highest yield on the day you place your order.

(For a list of all the Public Storage preferreds, visit www.publicstorage.com and click on the Form 10-K under Investor Relations.)

Join Profitable Investing risk-free today, and read the April issue immediately online. Inside, you'll get complete details on all of the income-generating investments covered today, including the Public Storage series preferred with the most active trading market that Richard is recommending to his Profitable Investing subscribers. Plus, you'll also receive immediate online access to Richard's newest stock report, 5 Top Income Stocks for 2009.