Look
at the high yield market today.
Not exact matches
You'll be surprised
at what the correlation has been between the
high -
yield bond
market and the overall stock
market.
Looking
at the forward earnings
yield for S&P 500 stocks, BAML finds dispersion is the
highest since 2009, when the
market was just starting to recover from the financial crisis.
On average,
high -
yield bonds are trading
at 86 cents on the dollar, meaning the
market is predicting a 14 % loss on the loans.
«Shorter duration hedge fund assets have grown
at a rapid pace even as
market liquidity has deteriorated, particularly in the
high yield and distressed debt
markets.
However, the softness in economic data, particularly as it relates to inflation, coupled with
market expectations that the first Fed rate hike won't happen until well into 2016 have inspired
at least a momentary burst in
high -
yield confidence.
In the European
market, the oil sector has a
high dividend
yield of about 6 percent — the
highest there is — which adds up to real value, says Nick Nelson, head of global and European equity strategy
at UBS.
Previously, Mr. Woolford worked
at CIBC World
Markets, Morgan Stanley & Co and BT Securities where he was responsible for originating, structuring and distributing
high yield and investment grade private placement securities.
There are a multitude of reasons as to why this occurs but it's a powerful enough force that many investors have done quite well for themselves over an investing lifetime by focusing on dividend stocks, specifically one of two strategies - dividend growth, which focuses on acquiring a diversified portfolio of companies that have raised their dividends
at rates considerably above average and
high dividend
yield, which focuses on stocks that offer significantly above - average dividend
yields as measured by the dividend rate compared to the stock
market price.
With
market volatility hitting multi-decade lows, junk bond
yields also
at record lows, the median price / revenue ratio of S&P 500 constituents
at a record
high well - beyond 2000 levels, and the most strenuously overvalued, overbought, overbullish syndromes we define, I'm increasingly concerned about the potential for an abrupt «air pocket» in the prices of risky assets that could attend even a modest upward shift in risk premiums.
If you want to earn interest on your money
at a
higher rate than what the
Yield Pledge ® Checking account offers after the intro offer expires, you might find a money
market account to be useful.
For example, while
high yield spreads are considerably lower than they were
at the January
market bottom, they are approximately 200 basis points (2 percent) wider than they were two years ago, as Bloomberg data shows.
Here is a look
at the
highest yielding securities in today's
market.
Prior to joining Cerberus, Mr. McLeod managed the leveraged finance origination and execution activities
at CIBC World
Markets from 1998 to 2006, where he originated, structured and executed transactions involving
high yield debt securities, leveraged loans, privately placed mezzanine securities and merchant banking investments.
Christina Padgett, head of leveraged finance
at Moody's Investors Service, said liquidity concerns are not a major problem for the
high -
yield portion of the
market now, but there are challenges for the future.
Among them are factors I've discussed
at length elsewhere — a weaker U.S. dollar, a steadily flattening
yield curve, heightened
market volatility, overvalued U.S. stocks, expectations of
higher inflation, trade war jitters, geopolitical risks and more.
Global monetary policy remains broadly accommodative — and in some areas more and more so — propelling equity
markets ever
higher and leaving a record amount of sovereign debt around the world (almost US$ 12 trillion by midyear)
yielding at or below zero (source: Fitch Ratings, as of 6/29/2016).
Carl Icahn, Icahn Enterprises Chairman, on the
high yield bond
market,
at the Delivering Alpha conference.
The
High Yield Dividend Champion Portfolio was designed to be fully invested
at all times regardless of
market conditions.
In the bond
market, Treasuries were
higher, but little - changed, with the 2 - year
yield right
at 2.5 % and the 10 - year sitting
at 2.96 %.
At Synchrony Bank, we provide trustworthy money
market accounts and
high yield savings accounts.
DLR is trading
at P / E ratio of 46.50 with a good dividend
yield of 5.01 % and
Market Cap of $ 9.22 B. It's 52 week
high was $ 75.39 and currently trading
at $ 67.93, almost 10 % lower.
DLR is trading
at P / E ratio of 28.30 with an excellent dividend
yield of 5.90 % and
Market Cap of $ 7.67 B. It's 52 week
high was $ 65.43 and currently trading
at $ 56.66, almost 13.5 % lower and fairly valued.
DE is trading
at P / E ratio of 9.60 with a good dividend
yield of 2.74 % and
Market Cap of $ 31.88 B. Its 52 week
high was $ 94.89 and currently trading
at $ 87.73, almost 7.7 % lower.
As usual, I don't place too much emphasis on this sort of forecast, but to the extent that I make any comments
at all about the outlook for 2006, the bottom line is this: 1) we can't rule out modest potential for stock appreciation, which would require the maintenance or expansion of already
high price / peak earnings multiples; 2) we also should recognize an uncomfortably large potential for
market losses, particularly given that the current bull
market has now outlived the median and average bull, yet
at higher valuations than most bulls have achieved, a flat
yield curve with rising interest rate pressures, an extended period of internal divergence as measured by breadth and other
market action, and complacency
at best and excessive bullishness
at worst, as measured by various sentiment indicators; 3) there is a moderate but still not compelling risk of an oncoming recession, which would become more of a factor if we observe a substantial widening of credit spreads and weakness in the ISM Purchasing Managers Index in the months ahead, and; 4) there remains substantial potential for U.S. dollar weakness coupled with «unexpectedly» persistent inflation pressures, particularly if we do observe economic weakness.
The
market «prices in» the tax - deductible feature on municipal coupon payments, so when you aren't a beneficiary of said tax treatment, then I (
at least) believe it makes more sense to get tax - free income on
higher yield corporate debt (of the same credit profile).
«Lower prices means
higher yields and that's what we're seeing,» said Benjamin Reitzes, a senior economist
at BMO Capital
Markets.
U.S.
high -
yield bond spreads are 34 basis points, or hundredths of a percentage point, tighter; cover spreads are 21 basis points tighter, and emerging -
market credit excess returns are
at 3.6 %.
But I am concerned that late - cycle entrants into risk assets like stocks and
high -
yield bonds are taking a leap of faith
at a time when there is less room for
markets to move up and growing risks of them falling back.
BMO Capital
Markets strategists on Thursday pondered a formation known as a «double top» for the 10 - year
yield at around 3.033 per cent, the approximate intraday
high over the past two sessions.
The fall in oil prices that culminated in big declines for stocks, emerging
market assets and
high yield bonds
at the beginning of this year is the most recent manifestation of this linkage.
Previously, Mr. Satchu spent 12 years in New York City where he was a General Partner
at Fenway Partners, a US$ 1.4 billion private equity firm focused on acquiring leading middle
market companies typically from families or large corporations and a Financial Analyst
at Merrill Lynch in the
High Yield Finance and Restructuring Group.
Importantly, when a preferred share is trading
at a
high current
yield relative to the
market yield, the investor receives a measure of protection from the impact of rising interest rates (or, if we're focused on real returns, the impact of rising inflation).
The end of 2013 saw bond
yields at their
highs and the US equity
markets making
higher highs.
Management's deep industry connections mean that the company can source new acquisitions from private
markets at far lower prices than many other REITs, resulting in cash
yields on new properties that are significantly
higher.
The rise in US
yields is thought to be the primary driver behind the USD resurgence, but unwinding of USD short positions, given that CFTC
market positioning was
at seven years
highs, also goes a long way to explain the dynamic shift in USD sentiment.
Depending on where the stock
market and bond
market are
at the time, I'd like to deploy $ 300,000 of the proceeds in low risk investments that have a
high chance of producing a 4 % gross
yield.
As the Federal Reserve contemplates
higher interest rates, Jeff Rosenberg looks
at past
market reactions, and what the
yield curve may be saying about stocks.
The lack of advanced breeding and biotechnology tools; no accessible existing
high -
yielding, heat - resistant varieties; poor practices in water and fertilizer use; and scant lending venues leave consumers
at the mercy of
markets.
Also, this seasonal shift alters the locations and return time of migratory species that pollinate the flowers on the trees, potentially reducing
yields and causing
higher prices
at the
market.
For example, a
high yield savings account or money
market account owned as a joint tenant with right of survivorship will generally pass to the surviving tenant
at death, regardless of what a will says.
Another option, though may be not as safe as CDs or money
market accounts, is
high quality dividend paying stocks (always understand that investing in the stock
market is riskier than putting money in bank accounts), some with more than 5 % dividend
yield at the end of 2010.
The fall in oil prices that culminated in big declines for stocks, emerging
market assets and
high yield bonds
at the beginning of this year is the most recent manifestation of this linkage.
This rate is even
higher than EverBank's temporary bonus rate for new customers, which sits
at 1.11 % APY for EverBank
Yield Pledge Money
Market.
For example, while
high yield spreads are considerably lower than they were
at the January
market bottom, they are approximately 200 basis points (2 percent) wider than they were two years ago, as Bloomberg data shows.
Looking
at the period from Dec. 31, 1999, to Dec. 29, 2017, when the
market (as represented by the S&P Composite 1500) was down, the S&P
High Yield Dividend Aristocrats outperformed the S&P Composite 1500 by an average of 161 bps per month.
If you have a 401 (k) plan
at work that includes a stable - value fund, you might keep your cash allocation in the fund, which may offer a somewhat
higher yield than, say, a money -
market mutual fund.
«The
high -
yield market is pricing in pretty
high expectations for credit quality,» says Bob Gorman, portfolio strategist
at TD Wealth.
Synchrony's
high -
yield savings account comes with low fees and one of the
highest rates on the
market,
at 1.65 % APY.
For that reason, many looking
at carry trading strategies will have to go out over the risk curve and borrow in a cheap major currency in order to buy a
higher -
yielding emerging
market (EM) currency in order to earn a
yield beyond that of
higher - duration US Treasury bonds (considered safe
yield).