Dividends4Life: A High-Yield Long-Term Bond Strategy

A High-Yield Long-Term Bond Strategy

Posted by D4L | Monday, December 06, 2010 | | 0 comments »

The environment today is kind of depressing if you're searching for yield. A lot of people are doing crazy things like chasing junk bonds or shaky currencies, which is fine if you can stomach a lot of volatility. But what if you're just the average guy or sovereign pension plan looking for income that you can count on? What do you do if you're the guy who can tolerate a little bit of risk but also wants to get the best bang for his buck on that risk?

The first part is to stay long bonds. Part two happens when (or preferably shortly before) the bond party finally does end. When we get the next big equity washout -- and don't worry, we will get at least one washout in the next few years -- that'll be time to sell all your bond funds. Then simply load up on high-quality, strong-dividend equities. Stuff like Johnson & Johnson (JNJ), Intel (INTC), AT&T (T) or Verizon (VZ), Royal Dutch Shell (RDS.A), Coca Cola (KO), Kraft (KFT), or McDonald's (MCD). You know, the usual suspects.

Source: Seeking Alpha

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