15 High Yield Corporate Bonds Raising Eyebrows

by Darwin on June 22, 2009

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                                      Maturity   YTM(%)    Current Yield(%) Fitch Rating
XEROX CAP TR I                     2027            10.436          9.938                        BBB
INTL PAPER CO                      2038             9.796            9.721                          BBB
WEYERHAEUSER                  2025             10.237         9.666                          BBB
CHESAPEAKE ENERGY      2015             9.093            9.337                          BB
MOTOROLA INC                    2031             9.473            9.323                          BBB
GOLDMAN SACHS CAP II  2099             9.270           9.269                           A
SPRINT CAP CORP                2028             9.626            9.046                         BB
ALTRIA GROUP INC            2038             8.845            8.923                         BBB
ROYAL CARIBBEAN            2011             8.899             8.772                          BB
VALERO ENERGY                 2039             8.579            8.711                          BBB
SEAGATE TECHNOLOGY   2016            11.163           8.662                         BB
DOW CHEM CO                       2029            8.379            8.172                          BBB
SUNOCO INC                           2015             5.880            8.131                          BBB
HUMANA INC                        2018             9.046            8.113                          BBB
TIME WARNER                      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 that reason, for my high yield self-directed IRA, I actually purchased the High Yield Bond ETF which has rallied since entry, plus still sports a double digit yield to boot.  For tax-free income, you may also want to consider high yielding Muni Bond ETFs as well.  For more details and basics on bonds, I refer you to more on corporate bonds.

For Savvy Bond Investors – What are your Favorite High Yield Corporate Bonds?

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{ 16 comments… read them below or add one }

1 Monevator June 27, 2009 at 2:48 am

I do wonder if I’ll regret not buying corporate bonds in years to come. The trouble is, now as almost ever, when corporate bonds are cheap, stocks look even cheaper, and you don’t get the extra benefit of the security of yield you get with government bonds.

[Reply]

2 Mack jackson June 29, 2009 at 2:31 am

Thanks for sharing such great post about corporate bonds, it will help many investor who want to invest in corporate bond.

[Reply]

3 Jade Bond August 21, 2009 at 10:38 am

Is that a typo on the GS bond? 2099!?

Also, I don’t suppose you can provide the cusips with each of those bonds. It would be quite helpful.
.-= Jade Bond´s last blog ..When Premiums Make Sense =-.

[Reply]

4 Darwin August 21, 2009 at 11:03 am

Hmm. Looks like a typo. I don’t have the Cusips handy now but I do posts like this somewhat routinely so I’ll be sure to include in the future.

[Reply]

5 Dick O'Meara September 28, 2009 at 2:45 pm

I need help!!!!
What would the yield be on HYG, and where can I find it.

[Reply]

6 Darwin September 28, 2009 at 3:21 pm

I’ve attached the YahooFinance summary. Here are last few monthly payments. Shows as ~10% per year. I’m long.

http://finance.yahoo.com/q/hp?s=HYG&a=03&b=11&c=2009&d=08&e=28&f=2009&g=v

[Reply]

7 Freddy Francis November 17, 2009 at 3:16 am

How can one obtain these bond, how to manage tax.

[Reply]

8 Freddy Francis November 19, 2009 at 8:00 am

What is fitch rating?

[Reply]

9 شات April 15, 2011 at 3:31 pm
10 mena November 21, 2011 at 9:26 am

what the quote from” global geophysical” cusip US37946SAB34 10.5% till 2017
wher i find the quote
Thanks

[Reply]

11 kanna February 6, 2012 at 9:30 am

i need more info about EURO CAP CORPORATION & BON HYANG INC. BONDS.
want to know more about the procedure for trade the bonds.looking forward contact details about the trader or brokers.

[Reply]

12 Umair March 28, 2012 at 10:09 am

What is the demand of geophysics? Is career of geophysicist is cool?

[Reply]

13 شات April 27, 2012 at 5:03 am

Good Chat

[Reply]

14 دردشة April 27, 2012 at 5:03 am

Thx Man

[Reply]

15 eveline April 27, 2012 at 6:52 am

Daer,
by Darwin on June 22, 2009
These is old time
What new to date bond recomondations?

[Reply]

16 bryant peterson September 21, 2012 at 12:36 pm

Are most of these people leaving questions illiterate?

[Reply]

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