investingfromtheright

I am retired and take educated guesses on all things financial.

April 12, 2007

April 13, 2007: Time to yield? High yield ideas





The introduction of the first High Yield Corporate Bond Fund ETF (www.ishares.com) ticker HYG created some initial excitement today. It is the first ETF High Yield roll out in the popular ishares Bond ETF series. However, it has a .50% expense ratio, well above other ETF Bond funds. I contacted the Barclay's press point person and asked this very question. No answer was received.Vanguard's High Yield Bond fund is expensed significantly lower. So are some others.

High Yield securities definitely have a place in the diversified investor's portfolio(s). I think it is a stretch for ishares to expense this fund at .50%. It should be half that cost, or less.

I did a quick check of some higher yielding stocks that could be an appropriate fit into your portfolio. I did not include real estate stocks or any bonds for this limited roster. It is possible that the Fed may cut interest rates this summer to alleviate the bumps and bruises as the markets and our society adjust to new loan stips and the fallout of loans in default. And, of course, to help the home construction market.

Here is a very short list, taken primarily from Standard and Poors:

AmeriGas Partners LP (ALD) 29.29/share/7.00%
Buckeye Partners LP (BPL) 50.81/share/6.30%
Double Hull Tankers (DHT) 14.74/share/11.80%
Enbridge Energy Partners LP (EEP) 58.16/share/6.50%
Enbridge Energy Management LP (EEQ) 56.31/share/6.80%
Ferrelgas Partners LP (FGP) 23.36/share/8.60%
Fairpoint Communications (FRP) 19.12/share/8.30%
General Maritime Corp. (GMR) 29.99/share/11.60%
KKR Financial Group (KFN) 27.30/share/7.20%
TC Pipelines LP (TCLP) 37.60/share/6.50%
Windstream Corp. (WIN) 14.60/share/6.70%

Limited Partnerships may have tax advantaged yields.

As we know, some stocks have high yields temporarily for a good reason: they are about to fall dramatically in price.

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