The last 2 weeks I have done very little as to buying and selling in our portfolios–although I continue to have some good til cancelled ‘buy’ orders in place, but no one has ‘given’ me shares recently, of course my offer is a wholesale price while sellers want retail.
I believe the last item I purchased was a 5.6% 1 year callable CD that JPMorgan was offering–now that rate has gone away and I see 5.50% available on Fido and 5.55% on eTrade. I’ll keep watching since almost every month there are maturities of treasuries and CDs, but I need to continue to scrutinize short dated maturity baby bonds from BDCs and that seems to be the best way to balance my CDs with high yield.
Just sitting back and collecting dividends and interest is most certainly a low stress way of investing – this is what we could only dream of a few years ago. I am certain that many investors out there are locking down 1 year, 2 year and 5 year rates and simply are content to watch the money come in—but we all know there is ‘reinvestment risk’ when those instruments mature–so the question is locking down 5% now for a few years in a CD versus taking more risk in an 8% BDC short maturity baby bond. Of course there is no right or wrong answer–everyone of us has needs and everyone is different.
So I see that Enbridge announced a giant acquisition of gas utilities from Dominion Energy. This may motivate me to look at the securities that Enbridge has outstanding (including their common shares)–maybe there is decent potential.
Today we have the ‘beige book’ being released at 1 pm (central)–we could well see some fireworks from this release.
Interest rates have popped back up and are at 4.25% area (10 year treasury)– we will see if this moves to challenge recent highs in the 4.36% area–a move above this level will open up potential moves higher.
Hi, I am new to dividend and bond investing. 98% of my money is in high yield savings accounts that are making 4.3% to 4.45% I have some money in Schwab SWVXX that is paying 5.2489% yield as of today 11/25/2023. I also have money invested in GAIN that I bought for $13.37 05/2023. I see that GAIN seems very stable price wise and pays a consistent 8 cents per share per month. I am pretty happy that it is just about to pay a 88 cent divident in December along with the 8 cent divend per share. It is currently trading at $14.75 per share. Has anyone here invested in 10 stable dividend producing stocks that pay 7% or better and if so can you share them with me ? Also I am interested in GLADZ but I am unsure if it is callable or not and what the fees are. If anyone can help me with the actual cost of GLADZ that would be helpful. I would be buying it through my Schwab account. GLADZ currently has an ask price of$27.69/share Thank you.
You might take a look at River North Capital and Income Fund, Inc. 5.875% PFD A shares which are trading just below par and are supposed to be redeemed in about one year. Its been discussed here several times, I think this is the most recent thread. A predictable, short duration income stream that is better than current money market yields.
https://innovativeincomeinvestor.com/rivernorth-capital-and-income-fund-completes-rights-offering/
Oops…just saw your looking for over 7% yield, never mind.
Hi, can you tell me what risk is there for GLADZ ?
Thank you
Andrew
The usual default risk. Not likely to happen but if enough things go wrong you never know.
How would you determine if this stock could default ? Is there a % somewhere that shows you the chance of default ? Also, since I am really very new to this, is this a stable investment to make ? How stable is it compared to a CD or High Yield bank account ?
I very much appreciate your willingness to ask basic question as a means to learn as a newbie. Not everyone is willing to do so. However, a lot of how you’re going to learn more has to fall on you to do a little studying on your own…. Believe me, everyone on this site is always asking themselves the same thing. i.e., if their bond/preferred has a chance of default and none will come up with a definitive answer until it’s too late… Prior to that it’s always going to be a personal opinion based on what you can garner on your own about the specific company….. What I would suggest would be to wend your way thru the info available on the credit rating agencies’ websites to find how they determine ratings for rated bonds…. https://www.fitchratings.com/credit-market-education-hub#what-are-credit-ratings? might be a good place to start…. That of course is not going to help you specifically on an issue like GLADZ that’s not rated, but if you spend some time trying to figure out how they assign ratings and what each specific rating implies regarding possible default risk going forward, then you might be able to attempt to personally pigeonhole GLAD into one of their ratings slots based on the parameters you discover are useful to them in assigning a rate. Just keep in mind, it’s always more of an art than a science, so there’s never an exact answer out there – that is until they default. Then you’ll definitively know what the percentage chance of default is… lol
Also, if you’ve not spent some time on the GLAD site, here’s an investor presentation that will give you info to help you garner your own opinion – https://d1io3yog0oux5.cloudfront.net/_f39ed6a9e31d678978d2351906f8d064/gladstonecapital/db/858/7827/pdf/GLAD+Website+Presentation+SEP_2023_vFINAL.pdf
You used the word “stable”, but that’s not really an investment term, so it’s hard to know what you mean.
Are you asking about loss of principal? Variance? Beta?
I suggest spending some quality time with investopedia.com
If you’re looking for a generalized answer to a generalized question such as this, the answers can always be found in the original prospectus…. Try starting at p S10 of https://www.sec.gov/ix?doc=/Archives/edgar/data/1143513/000119312523212356/d531429d424b2.htm. You’ll always find a list of identified risks for every issue in the original prospectus.
Welcome, SC – welcome to the fray…. A couple of observations: RE: GLADZ, you’re looking at an aftermarket view of the bid/asked to be coming up with an asked of $27.69. So by using that number you have an inaccurate impression of what the real market is or was on it on Friday….Obviously I have no idea who you use as a broker but using Fidelity’s Active Trader Pro, I can see that at the last trade on Friday, the true bid/asked on GLADZ was 24.80 bid 24.83 asked. Being able to see that when the market is closed is always helpful to get a better feel for where the real market was.
Regarding GLADZ’s call feature, by asking if it’s callable it suggests you may be unfamiliar with https://www.quantumonline.com/ or have yet to dig around right here on III for the info you are looking for because it’s easily discoverable at both…. No problem but take a look – you’ll find it helpful Beside III, quantumonline is an essential site for any
dividend investor….. Oh and GLADZ is callable 9/1/25.
Finally, I can’t help but be curious – for someone who’s 98% in high yield savings accounts and money markets, how did you find your way to GAIN and or GLADZ as your forays away from your 98%? Nothing wrong with them but it seems odd to find your way to BDCs as your way in to dividend and bond investing….
You’re in the right spot… Hope this is helpful…
Well, I bought 1 share of GAIN at $12.22 and then observed that I was making 8 cents per month consistently. Then earlier this year I bought 2000 shares at $13.37 per share. The high and low stock prices of GAIN seem “stable” and the trading range for GAIN, YTD is $13.05 to $14.83, up 14.52% over the last 12 months it is $14.06 to $14.83 up 5.48% over the last 12 months, and over the last 5 years it is $9.94 to $14.83 up 49% over the last 5 years. There have been additonal dividends paid this year and there is a huge one coming up in December for 88 cents per share. I am looking to diversify my money to something as stable as possible. Dividends are an interesting way to make money.
Some quick tips:
1. If you want to continue keeping a substantial balance in bank accounts, check out maxmyinterest.com to get a better rate and some convenience features.
2. If this is taxable money and you live in a state with income tax, consider whether SNSXX will give you a higher after tax return than SWVXX.
3. Go to schwab.com -> Trade -> Bonds and consider buying Treasury bonds to eke out a little more return from your cash holdings.
4. It’s a little challenging to find low risk preferreds paying over 7%. If you wait a couple of weeks that might change. For right now I’d suggest BAC/PRL, WFC/PRL, CHSCM, NI/PRB, and maybe LBRDP for your research.
Still like (1) Two Big to Fail with Fixed to Floating Rates (WFC, C, ST, GS) and (2) Investment Grade Fixed to Floating rates. However, I want coupons of around 6%+ with YTM’s of 6.5% to 7%. Not excited about fixed rate issues (yet). Made some small exceptions for RIV-A and F-D (25% positions).
Im not too excited about fixed perpetuals either, Steve. But I have recently bought a couple of the IG oldies plus 6% way below par. I have kept my floaters junky and high yield as I already have a Pig Pile load of CDs and TIPs/IBonds hiding in the closet like scaredy cats.
The market did give me mild amusement 5 star steak dinner flip flop though today thanks to dumb intercepting computer bots. I took advantage of a mid day big bid ask spread of over a dollar and sold all of my PCG-C share recently bought at a sub $16 blend in the $16.50s firing market orders at the wide spread. I then took the money and bought the corresponding 600 shares of PCG-D in $15.80s as I wasnt ready to leave the PCG junk family yet.
Yeah, lots of non-callable bank CDs (56% in FDIC Insured Bank). I have a laddered approach, next ladders expire on 10-23 and then 01-24. Depending on what the interest rate environment looks like, I might just leave the proceeds in the Money Market (SWVXX 5.22% but 0.34% expense ratio so it nets 4.88%). The difference in actual dollars in my pocket isn’t that great with Bank CD’s that are locked. Looks larger than it is. Schwab takes the money of your account when you order it versus when the CDs actually start to pay. Factor in a week or two of 0% interest and the delta narrows.
Some of my CDs are just “prisoners doing time” in the local jail so I leave the cash alone. I will start getting some maturities early next year and see how the lay of land is at that time. A fair amount of mine also are locked into 5 year noncallables bought last March or so with a 5-5.2% ish yield. So they were sent off to Leavenworth for extended hard time.
Grid, The amusing side of those brokered CDs and Treasuries that show a little red next to them is that we can wontonly buy more at the current better price, knowing that they’ll all go back to even at maturity. We’ve all been doing it long enough now they’re starting to roll off the end of the conveyor every 2-3 weeks. Within that bucket, happy to add even a small amount of duration when it pops up.
Like you, also started small add-on acquisitions of older utes again about 4 – 5 weeks back – though mighty quiet in the last two weeks as bids are not being hit. There’s no hurry and we can be patient waiting for the next “episode”. It absolutely, positively will happen.
PSA-H might not be a terrible idea for a short-term investment if you feel confident it will get redeemed in March of next year and you can get it under par. Currently trading at 24.82.
At that price the worst that could happen is you get “stuck” with a 5.64% yield on a preferred that will almost certainly get redeemed if rates decrease.
I don’t think there is any other play here besides recycling CDs and adding ever growing SGOV pile. Not even in the throws of the GFC was I this much in cash.
pig pile – I assume by cash you mean CDs etc?
Tim, Yes should have specified, CDs and I also consider SGOV a cash position as its very liquid and and available to jump on opportunities.
pig pile – I figured – ‘cash like’ vehicles. Thanks!
Yeah, I’ve been focusing mainly Treasuries of various maturity and a couple Federal Home Loan Bank bonds (gov-backed) as well. The CDs don’t appeal to me as much with their callable stature. To me, it’s akin to banks playing a base ball game and losing – then, if they start winning the game in the 5th or 6th inning, they can actually declare victory before the “game” is actually over!
But you might get to third base before the game is over so that’s something to look forward to.
Batter steps up to the plate, here’s the pitch-he’s going, and what a jump he’s got. He’s trying for third, here’s the throw, it’s in the dirt-safe at third! Holy cow, stolen base!
Phil Rizzuto……
Here’s my current playbook.
Taxable portfolio:
Add to ATH/D @16. Currently 25bps and willing to take it to 1%.
Add to LGGNY @13.5. Currently 50bps.
Add to PRU @85. Currently 50bps
Add to BAM @32. Currently 75bps
Initiate position in OWL @ 10.
BEP – 1% position, but I’m considering liquidating and taking the gain. I go back and forth on this.
Non-Taxable:
Started buying BDC baby bonds (CSWCZ, RWAYZ,SAZ,GAINL, GLADZ, WHFCL) up to 3%. Term yields of 8% are attractive (IMO) given the risk.
Started positions in a few REITS (BNL, ADC,GTY, HIW,VICI) given the sell offs, and have a list of others that I’ll start (PSTL, AHH) at the right prices.
Was wrong and sold off my BDCs after being up 7% YTD, and am now 15% cash. Waiting on the next market pullback to add back to my list, with each BDC being 3%.
For now, content to sit tight, collect divys and wait for the next time spreads blow out.
MP I assume by 3% you mean you would be willing to get back into the BDC’s as 3% of your holdings or 3% below where they are at? With a GTC bid sitting out there.
I’m willing for the BDC baby bond allocation (all together) to be 3% of total capital, while the actual BDCs I’m willing to go to 15% of capital. For the BDCs, I’ve identified the five I want to own for roughly 3% of capital, each. I keep two lists for BDCs (what I will own, and what I’d own for the right price).
That’s probably riskier than most, but I’ve done more work on BDCs than in pretty much any other space.
Hi, other than default is there any financial exposure to buying these that you’re interested in ? CSWCZ, RWAYZ,SAZ,GAINL, GLADZ, WHFCL
Please let me know since I am new to investing in this type of instrument.
Thank you,
Andrew
Hi Scaredy Cat
You’ve read the earlier posts about understanding the credit rating systems of Moody’s & S&P
You also need to understand the risks in the relative business segments you are looking at.
The companies you list above are BDC’s – Business Development Companies. These companies “bank” the lower end of the credit spectrum and thus are considered more “risky” and thus pay higher premiums on their bonds/preferreds to attract investors.
Our site mentions frequently DYODD – Do Your Own Due Diligence.
That translates into – spend the time and effort to become personally knowledgeable about the risk/reward factors of what you are considering.
My personal DYODD: I consider BDC’s on the higher risk end of the spectrum and I personally see the probability of a downturn/recession in 2024 as high. If that is the case, companies financing the riskier end of the spectrum (BDC’s) can be expected to fare worse than the more credit worthy.
My personal buying focus over the past month has been to migrate to the more “safe” preferreds/bonds: investment grade, utilities, and higher quality companies in the other sectors, accepting their lower yields for greater safety in a recession.
I would recommend you make the most safe investments until you gain the experience and knowledge of where it pays to take risk. Easiest way to do that is to go to any of the sites listing preferreds, and sort for investment grade issues.
Scaredy Cat–this page lists all $25 preferreds and baby bonds with their credit ratings (may have to scroll right).
https://innovativeincomeinvestor.com/25-share-master-list-income-securities/
This page has all the credit ratings agencies definitions of the ratings.
https://innovativeincomeinvestor.com/credit-rating-info/
Also if you are very new to preferred shares here is a very basic video.
https://innovativeincomeinvestor.com/a-very-basic-preferred-stock-primer-video/
I have some ENB notes as part of my 5 IG year ladder – I maintain quarterly runs on this ladder. Generally like IG pipeline debt, and have quite a bit of it. I saw separately that ENB are issuing about $4B CAD of equity to help pay for this acquisition. – good for bondholders. It is an interesting acquisition in that they could (in theory) work to supply their gas utilities with ENB pipelines. Of course they could also buy a natural gas E&P firm and become completely vertically integrated.
Less obvious, there is also potentially a carbon capture play. CO2 generated by the utilities, as a product of combustion of CH4, can be captured, and transported via pipeline to a central CO2 sequestration facility. So ENB could hypothetically transport Methane to the plant and then transport CO2 away from the plant.
Tim, Why would you prefer to buy a jpmorgan 1 year cd, when a 1 yr treasury pays about the same? Even if it’s in a non-taxable account, or if you live in a state with no taxes, why not just a treasury? The only reason I could think is that you are betting that the cd won’t be called in 1yr, and that at that time you wouldn’t be able to buy a similar treasury, or maybe something I don’t understand?
Tim,
Re-posting as it may be interesting to understand :
Tim, Why would you prefer to buy a jpmorgan 1 year cd, when a 1 yr treasury pays about the same? Even if it’s in a non-taxable account, or if you live in a state with no taxes, why not just a treasury? The only reason I could think is that you are betting that the cd won’t be called in 1yr, and that at that time you wouldn’t be able to buy a similar treasury, or maybe something I don’t understand?
“Re-posting as it may be interesting to understand :”
It seems that although I thought this post asked a valid and interesting question in this forum, apparently it is not, as it does not receive a reply, so I guess I should “drop” it and not re-post anymore. My apologies if this question was out of place.
Dd,
No need to re-post. Your original post got 3 likes. I think you can take that, along with no replies, that your logic is sound.
And don’t forget we are taking about minutiae. Many don’t distinguish between a FDIC insured CD and treasury, especially in a tax deferred account.
I haven’t invested in this space, but do brokers charge different commissions for Brokered CD’s versus US Treasuries?
I know that the CD issuers pay commissions to brokers to sell the instruments (which is outlined in the prospectus), which the Treasury obviously does not.
Martin, Justin,
I take Martin’s observation. Thanks!
As for Justin’s question, idk. For secondary treasuries brokers do take a commission from you, some brokers a small commission (about 0.2) others a lot more!
But many brokers allow you to buy treasuries at auction paying just the auction price without any commissions. Whether they take a cut from the Treasury, idk (but it doesn’t really make any difference to me if they do, because you get the exact same price you would pay if bought at Treasury Direct).