Major banks are issuing preferred stock by the boatload, as they seek to shore up their capital base and investors clamor for high-yielding investments.

The average yield on preferred shares totals 4.56 percent, according to a Bank of America index, The Wall Street Journal reports. That dwarfs the five-year Treasury yield of 0.73 percent.

Preferred stock has features of both stocks and bonds. It trades on an exchange like a stock, but pays a regular fixed dividend like a bond. It sits between bonds and common stocks in the credit structure.

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown

So far this year, companies have sold $13.6 billion of preferred stock, the fastest annual pace since 2008, according to Dealogic. Financial companies account for 88 percent of that total, with some of the biggest issues coming from JPMorgan Chase, Citigroup and Goldman Sachs.

Preferred shares help banks build their capital more cheaply than other fundraising techniques because microscopic interest rates are spurring demand for high-yield investments, The Journal explains.

Banks' improved health and preferred shares' tasty yields "make them a compelling investment," Douglas Baker, a preferred stock fund manager at Nuveen Asset Management, tells the paper.

"Preferred stock isn't the perfect investment for everyone, but the creative ways that companies are using it opens up some lucrative opportunities for investors," Dan Caplinger of The Motley Fool writes.

"When a company you're interested in offers a preferred stock issue, look at its characteristics and see whether it might be a better fit for you."

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown