An additional rule of thumb when selecting preferred shares is that the amount of time that an investor will require to spend monitoring the issuing company and their financial health is directly proportional to the shares credit rating. For example, a preferred share with a credit rating of Pfd-3 will require three times the effort in monitoring the issuing company than a share rated Pfd-1. So if an investor is not prepared to spend the time or does not have the interest in monitoring their preferred shares, they are best to select the preferred shares with the higher credit ratings.
Note: Investors should also keep in mind that just because a share has a credit rating of Pfd-1 does not mean that the investor can simply buy the shares and forget about them. Just as with any investment, it is the responsibility of the investor to keep informed about their investments.