Tip of the week: Which bonds are better than equities for income?

TIP OF THE WEEK

clock

While the recent yield crossover of UK equities with the 10-year gilt led many investors to place a strong buy on the stock market, Ignis' Chris Bowie highlights a number of higher-yielding bonds better placed to deliver for income investors.

Scottish Widows Compare the T1 bonds with a cash price of 74 and a yield of 12.5% against its parent company, Lloyds, with an equity yield of zero. Of course, this is not a risk-free trade given there are risks Scottish Widows could be sold by Lloyds to another company that could gear up the balance sheet. The parent company will be not paying a dividend until at least the latter part of 2012 however, so in the meantime the bonds offer significant value. Lloyds ECN’s Very similar story to Scottish Widows in that they have the same equity parent (Lloyds again), which is not paying div...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Bonds

BlackRock unveils set of iShares bond UCITS ETFs

BlackRock unveils set of iShares bond UCITS ETFs

iBonds surpass $6.3bn AUM in EMEA

Cristian Angeloni
clock 07 November 2024 • 1 min read
Four Graphs explaining 'what happened to the year of the bond'

Four Graphs explaining 'what happened to the year of the bond'

Four experts write

Investment Week
clock 06 November 2024 • 3 min read
UK gilt yields hit 2024 high as investors mull over Budget borrowing

UK gilt yields hit 2024 high as investors mull over Budget borrowing

10-year gilt yield rises to 4.45%

Valeria Martinez
clock 31 October 2024 • 2 min read
Trustpilot