Baby bonds, or exchange-traded debt, are similar to preferred stock in that each behaves both like a stock and a bond. Baby bonds trade like stocks on the major exchanges, however there is a narrow range of prices they trade in. It is easier to trade baby bonds because, unlike regular bonds that often trade in minimum baskets of $10,000, you can buy or sell any amount. Like many bonds, they push out distributions on a quarterly basis. However, the money gets taxed as ordinary income, not as dividends. Here are three issues worth looking at for your portfolio...
Stanley Black & Decker 5.75% Jr. Subordinated Debentures (NYSE:SWJ) are baby bonds issued by that most famous of consumer brands, Stanley Black & Decker, Inc. (NTSE:SWK). Entergy Louisiana 5.25% First Mortgage Bonds (NYSE:ELB) are issued by a public utility (electricity) that is based in Louisiana. Legg Mason Inc. 6.375% Jr. Sub. Notes Due 2056 (NYSE:LMHA) are bonds courtesy of the solid and reputable investment firm of Legg Mason, Inc. (NYSE:LM).
Source: InvestorPlace
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