Choose bonds with the highest income
Bonds are deservedly considered a more reliable investment tool compared to shares, since they are one of the first when repaying debt obligations.
Bond owners receive fixed payments on the coupon, and also return the entire amount of investment by the repayment date.
Unlike dividends on shares, bond payments are required, they do not depend on the amount of profit received by the company or on the decision of the board of directors.
However, bonds are also different. The most reliable are state securities, but income on them rarely exceeds 2.5-3 % per annum.
Much more can be earned on corporate bonds, especially when we are talking about companies with moderate or high level of risk. Such papers can bring up to 7–9 % per year, especially if you take companies not only from the USA, but also from Europe and Asia.
Of course, high profitability is always associated with risk. Therefore, when choosing bonds, it is important to take into account the issuer rating, liquidity , current value, deadline before repayment and real payment of the company.
Finding a worthy balance between income and reliability is the main task of the investor, this is what we will try to do today.
10 bonds with the highest profitability (USA, Europe, Asia)
| # | Bond | Coupon% | Price | Profitability % | Risk |
|---|---|---|---|---|---|
| 1 | Pfizer 7.2% 2039 (USA) | 7.20 | 117.87 | 5.44 | High |
| 2 | OCCIENTAL PETRLEUM 6.625% 2030 (USA) | 6.625 | 102.50 | 6.35 | High |
| 3 | Ford Motor Credit 6.375% 2028 (USA) | 6.375 | 101.10 | 6.15 | Medium-high |
| 4 | At & t 5.85% 2034 (USA) | 5.85 | 98.20 | 6.00 | Average |
| 5 | Renault 5.625% 2028 (France) | 5.625 | 99.10 | 5.65 | Average |
| 6 | Banco Santander AT1 7.0% Perp (Spain) | 7.00 | 100.00 | 7.00 | High |
| 7 | Skechers euro 2029 8.625% (Czech Republic) | 8.625 | 100.00 | 8.63 | High |
| 8 | China Telecom 4.95% 2029 (China) | 4.95 | 98.50 | 5.10 | Average |
| 9 | Tabula Haitong Asia Hy ETF (USD) | — | 100.00 | 8.52 | High |
| 10 | MANGROVE Luxco SR Sec 7% 2029 (Luxembourg) | 7.00 | 101.00 | 7.00 | Medium-high |
A brief description of companies
Pfizer is an international pharmaceutical giant with sustainable income, especially after vaccines. Pharmacifical companies remain profitable even in crisis.
OCCIENTAL Petroleum is one of the largest independent oil and gas companies in the United States.
Ford Motor Credit is a financial unit of the Ford Auto Concert, producing debt papers.
AT&T is one of the oldest and largest telecommunication operators in the United States, focused on the domestic market, therefore it is not subject to the influence of trade wars.
Renault is a French car manufacturer restoring a position after crisis years.
Banco Santander is a Spanish bank that produces profitable AT1-wings with increased risk.
Skechers Euro (Czech Republic) is a subsidiary of an international shoe manufacturer with high profitability.
China Telecom is the leading telecom operator of China, who is stably working with high profitability.
Tabula Haitong Asia Hy ETF is a fund investing in Asian highly profitable papers with dollar profitability.
MANGROVE LUXCO is a European company with the release of wealthy bonds in the euro, offering 7 % per annum.
As you can see, highly profitable bonds can be found not only in the USA, but also in the markets of Europe and Asia. The profitability of such papers easily exceeds 6–7 % per annum, especially if you consider subordinated, highly profitable or stock structures. The main thing is to evaluate the level of risk and not chase numbers without analysis.
The optimal portfolio may include 2-3 such papers with a profitability above 7 % and supplemented by more reliable bonds with a revenue of 5-6 %. This will achieve a good balance between profit and the stability of investment.
In addition, bonds, like shares, can also rise in price and this will bring additional profit if you sell them at the right time.