How to Buy Rate-Proof and Crash-Proof 8%+ Bonds

Our Archive

Search completed

If you take the mainstream financial media at face value, you might be under the impression that all high yield bonds are in big trouble with interest rates on the move.

Wrong.

The best bond portfolios haven’t actually budged since the recent market insanity began. Take, for example, our favorite PIMCO play. Its net asset value (NAV, the actual market value of its holdings) held steady while the stock market was dropping sharply:

What Crash? This NAV is Steady

The fund’s price, meanwhile, eased down 2.2% from peak to trough. But we shouldn’t confuse price with value – we should focus on the latter, which is a more accurate measure for investing profits.…
Read more

Read More

The term closed-end fund (CEF) is a bit of a double entendre. An unintended one, I’m sure – and one we can leverage for safe 6%, 7% and even 8% yields with upside to boot.

The “closed” in CEF technically means that the fund’s number of shares are fixed. Which is why these vehicles can have wild price swings above and below the values of their actual assets. (Good for us contrarian income seekers – we can buy below fair value to maximize our yields and upside.)

They are also closed in their actual communications with the financial world. Fund information is often limited (sometimes to one-page fact sheets) and it’s difficult to get management to talk to you.…
Read more

Read More

Don’t take any stated yields for granted these days! The financial news has been flooded with dividend cuts lately, with Teva Pharmaceutical (TEVA) and Mattel (MAT) taking the hatchet to their payouts, and telecom Windstream (WIN) dropping its dividend too.

It’s dangerous to buy headline yields – or even supposedly “safe” blue chips with more modest dividends – without looking at the profits funding these payouts. Companies with high payout ratios (how much in earnings, funds from operations and other measures a company pays out in the form of dividends) are a twofold risk:

  1. High payout ratios can lead to a slowing in dividend growth, which means your payout is increasingly likely to fall behind inflation.


Read more

Read More

Is there a bond bubble? There’s certainly more froth than not, with investors recklessly reaching for the riskiest of yields.

But there’s one last 10% dividend on the board worthy of our consideration. It’s available thanks to investors’ misunderstanding (and laziness) – we’ll discuss details in a minute.

But first, let’s review three key rules that will help us navigate this budding bond bubble.

Rule #1: Maximize Your Upside

Our favorite second-level thinker Howard Marks noted in an op-ed for Barron’s that Netflix (NFLX) bond buyers – who recently scooped up €1.3 billion of Eurobonds paying just 3.625% – might have exposed themselves to significant downside without much upside.…
Read more

Read More

About Author

Brett

Hi, I’m Brett Owens – and I’m a financial junkie. My “problem” started incollege, when I got a little dose of the stock market – man, was I hooked…in no time, I was reading the Wall Street Journal religously.

Sign up for our Newsletter

Categories