15 High Yield Corporate Bonds Raising Eyebrows

With corporate bonds slowly emerging from Depression-era pricing scenarios, there are still bargains out there in 2009 with many household names providing high yield income with seemingly manageable risk.  In reviewing the hundreds of high yield corporate bonds yielding over 8% (I chose this yield since it is roughly what stocks return over long time periods and any increase in bond value over time is a bonus!), I screened out companies below a BB rating (borderline investment grade/speculative non-investment grade), the majority of the Financials, companies who seem to be teetering on a credit rating reduction or are in the news for significant solvency troubles and I focused on relatively large household names that will probably surprise you to see such high yields.  Over a long period of time, capturing a recurring 8% yield, plus the likely increase in bond value as fears abate over financial conditions would make for a great double digit return in a self-directed high yield IRA account. 15 High Yield Corporate Bonds Issue                                     Coupon(%)   Maturity    YTM(%)      Current Yield(%)   Fitch Rating XEROX CAP TR I                   8.000            2027            10.436          9.938                           BBB INTL PAPER CO                    8.700            2038             9.796            9.721                          BBB WEYERHAEUSER                7.950             2025             10.237         9.666                          BBB CHESAPEAKE ENERGY     9.500             2015             9.093            9.337                          BB MOTOROLA INC                   8.400             2031             9.473            9.323                          BBB GOLDMAN SACHS CAP II   5.793             2099             9.270           9.269                           A SPRINT CAP CORP             6.875             2028             9.626            9.046                         BB ALTRIA GROUP INC            9.950              2038             8.845            8.923                         BBB ROYAL CARIBBEAN            8.750              2011             8.899             8.772                        BB VALERO ENERGY               10.500           2039             8.579            8.711                          BBB SEAGATE TECHNOLOGY  6.800              2016            11.163           8.662                         BB DOW CHEM CO                    7.375              2029            8.379            8.172                          BBB SUNOCO INC                       9.625               2015             5.880           

8.131                        BBB HUMANA INC                        7.200             2018             9.046            8.113                          BBB TIME WARNER                     9.125               2013             5.292             8.111                       BBB Without performing a detailed solvency analysis on each of these corporate bond issuers, I’ll just say that while these companies may not be lighting the world afire in terms of financial strength, share price appreciation and future growth companies, I don’t see any of them as a candidate for insolvency.  I included Goldman Sachs even though it is a Financial since they’ve demonstrated best-in-class performance in both managing their risk during the collapse in mortgage backed securities (at least better than their competitors given their potential exposure and the government’s hand-out by saving AIG who ended up paying GS a tidy sum) and they’re at the front of the line in repaying TARP funds - share price appreciation seconds this notion. Investing in corporate bonds is not as simple as your typical stock or ETF.  There are some ins and outs of corporate bonds you should understand before embarking on building a high yield corporate bond portfolio.  Sometimes, buying an individual bond can be quite expensive in both net outlays, plus fees.  Additionally, there are often several bonds for the same issuer.  For more details and basics on bonds, I refer you to wikipedia’s description of corporate bonds . For Savvy Bond Investors - What are your Favorite High Yield Corporate Bonds? Related posts: Structured Notes: Products Deliver Guaranteed Returns in any Market Stockpicker Investing is Gambling Says Vanguard Icon The Riskiest ETFs on Earth - 3X Sector ETF Short/Long Advanta Freezes Credit Cards - High Yield Notes in Jeopardy? Weekly Linkfest: Stress Test Edition

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15 High Yield Corporate Bonds Raising Eyebrows