When to get back in to bond funds?

[Mulligan]

Hi Mulligan; I am wondering why BGE-B and not also BGLEN which is currently at 103.50 with a yield of 6.5%. Is it the above par premium on this one that makes BGE-B preferable? Also QOL shows that BGLEN is elligible for the 15% div rate while BGE-B is shown as not qualifying for 15% treatment. Are there any differences between these two preferred issues that I am not seeing?

PS Thanks for your insight and willingness to share

I forgot to answer last part, Golden. BGE-B is in my Roth account. That is a very good point to bring up. The "baby bonds" or non 15% preferreds always go into my HSA or Roth. A special shout out to fellow member Moorebonds for getting my head screwed on right with those types of purchases.


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[Mulligan]

The entire area of preferred stock/ETD is not widely known.

In the past when equities were the rage, and bonds were the " quality and risk-off " alternative, few regarded Preferred Stock as a worthwhile investment vehicle.

Today, this antiquated perception is what keeps the sector from being overheated, which I believe is why it continues to offer value. Yes, there are pros & cons, one still needs Due Diligence as with everything else.

The Preferred sector, for the past few years has been providing the bulk of my retirement income, ( I have no pension ). Average yield for the past few years has been 5.7%.

Like Mulligan says, there are many great websites that provide a very comprehensive grasp of this sector - I suggest QuantumOnline as a start.

Perhaps, if there are enough members interested, a separate thread could be started ?

Coolius, maybe just maybe there are other people who drink the preferred koolaid? Your above point helped accelerate my interest in them. Bonds and especially treasuries are of course near record low yields. But historically speaking the spread between preferreds and treasuries are still unusually wide validating your statement that the "overheating" isn't as high in some of the preferreds. The price history of some of my preferreds show the same price today with 2.2% treasury yield as they did when the 10 year was over 4%. Who knows the future though....


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[Totoro]

If we could create a corner discussing preferreds somewhere I'd be very interested (pun not intended).

Also don't have much to contribute though ..

 

[LiveBelowMeans]

Just a thought

If you want a hands off approach to preferreds, you might want to look at PFF the largest preferred etf with $13.3 billion in assets. Yields around 6%. JMHO

 

[Golden sunsets]

If we could create a corner discussing preferreds somewhere I'd be very interested (pun not intended). Also don't have much to contribute though ..

+1.

And thanks Mulligan-just the type of info I was looking for. I think I'll start a string on Preferred's with a stupid question to get it started.

 

[Nunthewiser]

^^ I'm all ears . Edgermakate me, please