«Right now there are fantastic opportunities in municipal bonds... I have locked in... long - term high - quality
municipal bonds yielding the taxable equivalent of 11 % to over 12 %!
By those criteria, 10 - to 30 - year
municipal bonds yielding 4.5 % to 6 % before taxes would appear to be the safer buy.
To answer that question, I added two more columns, each showing the tax - equivalent yield of
the municipal bonds yielding 2 %, but at different tax rates.
Although
municipal bond yields are generally lower than taxable bond fund yields, some investors in higher tax brackets may find they have a higher after - tax yield from a tax - free municipal bond fund investment instead of a taxable bond fund investment.
High yield
municipal bond yields have risen by 30bps in the same time period as the S&P Municipal Bond High Yield Index is down 1.76 % so far in June.
Not quite out of the news headlines yet, Puerto Rican
municipal bond yields are at 8.13 %, right where they began the week, as measured by the S&P Municipal Bond Puerto Rico Index.
High yield
municipal bond yields and relative spreads to investment grade munis have moved to lows not seen since 2008.
The MMD AAA is the US
Municipal Bond Yield Benchmark used to measure price and rate movements.
Let's look at an average
municipal bond yield curve (Figure 3) over the last five years from 1999 — 2003.
For instance, if you were in the 25 % federal tax bracket, a taxable bond would need to earn a yield of 6.67 % to equal a 5 % tax - exempt
municipal bond yield.
The first is the very high ratio of
municipal bond yields to Treasury yields.
Therefore, higher - income investors (with theoretically higher tax bills) are likely to benefit more from
municipal bond yields than individuals in lower tax brackets.
All municipal bond yields listed in this table are well above those of Treasuries.
For example, lets say that a tax free
municipal bond yields 5 % and my federal and state tax rates are 25 % and 7 % respectively.
Not exact matches
We believe that long - term tax - free
municipal bonds that offer near - 4 %
yields (a 6.62 % taxable equivalent at today's top rate and 6.15 % even at the new proposed top rate of 35 %) still offer superior value.
Also, they usually offer higher
yields than
municipal bonds.
RB: The extreme undervaluation of high
yield municipal bonds.
Bonds due in 2018 and won by BofA were «aggressively» priced with a 1.64 percent
yield that narrowed Illinois» spread over
Municipal Market Data's benchmark triple - A
yield curve to 70 basis points from 100 basis points ahead of the sale, Greg Saulnier, a MMD analyst, said.
Tax risks While
municipal bonds can offer attractive effective
yields and can be a way to generate tax - free income, they may not be right for investors in every tax bracket or for every type of account.
I've personally been accumulating a large position of California
municipal bonds whenever the 10 - year
yield breaches 2.6 %.
We also like tax - exempt
municipal bonds, which currently offer attractive
yields.
Buffett lamented in 2010 that he didn't buy more corporate and
municipal bonds during the credit crisis when
yields made the securities «ridiculously cheap» compared with U.S. Treasuries.
Like most sectors of the fixed - income market,
municipal bonds struggled in the first quarter as
yields climbed higher.
In addition to the positive technical element I mentioned earlier, the potential removal of the alternative minimum tax could cause AMT paper to trade closer to the
yield on other
municipal bonds.
Tax reform could impact the high
yield market and lead to a buying opportunity for
municipal bonds.
Similarly, you should have a variety of
bonds in your portfolio, including Treasury
bonds,
municipal bonds, corporate
bonds,
bonds with different maturities, foreign
bonds and high -
yield bonds.
Collins has adopted a more defensive position in the last 18 months, reducing duration and credit risk by scaling back overweight positions in high -
yield and
municipal bonds, but he's sticking with allocations to intermediate term funds.
The
yields and risks are generally higher than those offered by government and most
municipal bonds, and the income is subject to state and federal taxes.
I slowed my
municipal bond purchases because the 10 - year
bond yield edged down to about 2.15 %, which made
yields unattractive.
Blackrock Muni
Yield Investment Quality (MFT) is a closed end fund that seeks current income exempt from regular Federal income tax through investment in insured investment grade
municipal bonds.
In fact, I will probably reinvest 70 % of my $ 185,000, 3 % CD into
municipal bonds that now pay 4.5 % -5 % gross
yields.
Split the sum amongst Treasurys,
municipal bonds (which are similar to Treasurys in performance and
yield), stocks, and mutual funds.
There is the Treasury or Government
bond, the Zero - coupon
bonds, the Fixed rate
bonds, the Floating rates notes, the High -
yield bond, the Exchangeable
bonds, the Convertible
bonds, the Inflation - indexed
bonds, the Subordinated
bonds, the Covered
bonds, the Perpetual
bonds, the Bearer
bonds, the
Municipal bonds, the Revenue
bonds, and the Social impact
bonds amongst others.
For example,
bonds with favorable tax treatment such as
municipal bonds can actually trade at a
yield which is below US Treasuries.
The minimal dividends from traditional CDs and high - quality Treasury
bonds leaves little to be desired when compared to corporate or
municipal debt
yielding magnitudes of greater income.
Investors looking to balance risk and income while searching for
yield may want to consider the iShares S&P National AMT - Free
Municipal Bond Fund (MUB), the iShares Core Dividend Growth ETF (DGRO) and the iShares U.S. Preferred Stock ETF (PFF).
In April, the long end of the
yield curve underperformed, and as
municipal bonds have more of their interest rate exposure coming from the long end, this contributed to their underperformance.
They should go higher as interest rates rise, but they aren't as tax efficient as
municipal bonds, which are already
yielding higher rates.
Instead, we would continue to emphasize U.S. high
yield bonds and longer - dated
municipals, as we believe both still offer some relative value within fixed income.
Although default risk is typically low, there are high -
yield municipal bond funds that increase credit risk.
We prefer tax - exempt
municipal bonds, as well as U.S. high
yield debt.
We prefer shorter - term corporate and
municipal bonds, whose
yields have temporarily spiked ahead of U.S. money market reforms in October.
This has prompted many foreign investors to seek out other investments, including American
municipal bonds, which still offer attractive
yields.
The Bloomberg Barclay's High
Yield Municipal Bond Index tracks consists of below - investment grade municip
Municipal Bond Index tracks consists of below - investment grade
municipalmunicipal bonds.
If the ratio is at 100 %, it indicates that the
yield on a AAA - rated
municipal bond is the same as a Treasury security of the same maturity.
Over time, MFS has been a leading innovator in the asset management industry, including creating one of the first in - house research departments in the mutual fund industry in 1932, launching the first high -
yield municipal bond fund and the first global balanced fund, and more recently creating «outcome - oriented» products, such as its line of target - risk, target - date, and other asset allocation strategies.
Municipal Bonds provide investors with a great combination of high
yields and tax - free income.
NEW YORK (AP)--
Yields for
municipal bonds climbed this week, and the 10 - year yield on the AP Municipal Bond index hit its highest level in
municipal bonds climbed this week, and the 10 - year
yield on the AP
Municipal Bond index hit its highest level in
Municipal Bond index hit its highest level in a month.
The duration of the S&P
Municipal Bond High
Yield Index is 7.58 vs a 4.98 duration of the S&P U.S. Issued High
Yield Corporate
Bond Index.
MFS ®
Municipal Income Trust is the first closed - end, high - yield municipal bond fund traded on the New York Stock
Municipal Income Trust is the first closed - end, high -
yield municipal bond fund traded on the New York Stock
municipal bond fund traded on the New York Stock Exchange.