Monthly Income Preferred Securities (MIPS) investment & finance definition

A type of preferred stock issued by a special-purpose partnership with the intent of lending the proceeds of the stock issue to a corporate parent. Interest received by the partnership is used to pay dividends to the preferred stockholders. The relatively complicated structure of such a stock issue provides a tax deduction to the corporate parent, which pays interest rather than dividends. MIPS offer higher yields than regular preferred stock and can generally be redeemed in five years.