| 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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How To One Up Buffett's Bank Of America 6% Yield |
Seeking Alpha - Sept. 1, 2011 - By Randy Durig
Most readers would agree that Warren Buffett negotiated a great deal with Bank of America (BAC), $5 billion in preferred stock yielding a 6% dividend (plus warrants and a buyback premium.) However, achieving a similarly rich yield (with a possible upside kicker) with Bank of America doesn’t require billions of investment dollars or a famous name, and in actuality, may be much easier to attain than the average retail investor realizes. If only they have the desire, the right information, and the right connections. Of course, that’s how a good investment advisor can prove their worth.
Bank of America Bonds
It is fairly common for large multinational financial institutions, such as Bank of America, to issue debt (bonds) denominated in the local currency of countries where they conduct business. The reason for borrowing large amounts of money is simply to lend it out (typically many times over) at a higher rate, making a profit on the difference, or the spread. It is to Bank of America’s advantage to borrow, leverage, and lend in a local currency simply because it removes any “currency exchange risk” from its most basic and fundamental business of borrow, leverage, and lend.
We have identified certain Bank of America debt, denominated in the Australian dollar, which currently has a yield of about 7.0% for 24 months. The high yield and very short maturity of this Aussie bond, when considered with its solid A rating and good cash position, compares extremely favorably in relationship to other high yield instruments in our Foreign and World Fixed Income holdings. We believe the dollar’s longer term weakening trend against many world currencies remains a major concern for investors seeking protection against its devaluation and a further erosion of its buying power, and we share the concern of our clients in protecting existing wealth by utilizing the higher yields of sound issuers in many of the world’s strongest economies.
Wealth Preservation Concerns
Wealth preservation now appears to be the name of the game in the West. In other words, the focus for many people is not to make more money, but to preserve the wealth they already have. Declining equity and property prices, ultra-low interest rates, minimal pay raises, elevated inflation, ineffective politicians, potentially increased taxes, and the constant printing of more money are converging into what appear to be perfect financial storm conditions. One financial storm after another beats down, eroding away wealth, until the aforementioned conditions finally change. Few of us would disagree that the excessive borrowing from tomorrow as means to pay for the lifestyle of today becomes increasingly untenable when the production of tomorrow slows and threatens to contract from the production of today. A country that produces less must eventually consume less, and the value of its land and companies will also axiomatically become worth less. With the Consumer Price Index climbing towards 4%, wealth destruction is appearing on almost every front, as the real value of everything is falling by that same amount. At only a 25% tax rate, accounts must pay over 5% just to make any real return against a 4% CPI, which is increasingly difficult to achieve.
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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