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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Using REITs to Generate Monthly Income With Little Downside Risk |
Seeking Alpha - March 14, 2011 - by Matt D'Alto
In our current world of sub-1% interest-bearing money market accounts, I find myself increasingly looking for "creative" ways to boost the yield of my investable cash these days. The problem is, shorter-term bonds are generally of little help to this objective. You need to go out to at least 10-year paper today for the incremental yield to matter, and that kind of duration risk right now just doesn't seem palatable to me given I have trouble seeing the future one-year out, much less 10 years. Treasuries and corporate bonds, especially those with longer-term maturities, broadly seem somewhat overpriced to me in the shorter-term and make me nervous about investing new capital at current levels.
Certainly this thirst for yield has created some of the recent demand for higher-yielding equities. Many of higher-yield alternatives, such as REITs, have attracted investors and thus have seen yields come down over the past 18 months or so. Still, the yield spread on a typical REIT relative to a money fund remains meaningfully wide.
For the most part, I have been unwilling to be long REITs because of some of the risks I still foresee in the real estate market, which I believe the market has largely ignored because of the Federal Reserve's current easy-money policy. But until Helicopter Ben decides it is time to tighten policy, the downside risks will continue to be masked.
Even with the risk of rising rates sometime in the future, I believe I have devised a relatively low-risk strategy for investing in REITs that will allow investors to take advantage of their current higher-yielding cash flow characteristics, while protecting your downside investment risk in the event of a correction in REIT prices. And you do not need a lot of capital or knowledge about individual REITs to execute this strategy.
Review of PowerShares KBW Premium Yield Equity REIT Portfolio (KBWY)
In recent months, Keefe, Bruyette & Woods and Invesco PowerShares have partnered and come to market with a new ETF called the PowerShares KBW Premium Yield Equity REIT Portfolio (KBWY). What makes this particular REIT ETF unique is that it is the only REIT ETF (at least that I am aware of) that pays its dividends on a monthly rather than a quarterly or semi-annual basis. To some, this may not be that big a deal, but personally I like the idea of earning a more frequent income stream wherever possible (something about present value that I learned in business school).
According to the KBWY prospectus,
The Fund will normally invest at least 80% of its total assets in equity securities of real estate investment trusts.
For the complete article.
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| Stuff to look at |
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S&P Commentary and Newsletters: S&P
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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