Banc of California Will Pay You 7.3% On Your Savings - What will Your Bank Pay?

Have you checked with your bank recently abut the interest rates on their savings accounts or certificates of deposit? I did. On a big sign, it said 'Get 1.0% on a CD' but in small letters it said 'Rate payable on a 10 year CD; penalty for early withdrawal.' Of course, on savings accounts and money market accounts, the rate can be less than a tenth of a percent.

So if you want a high yield, where do you turn? How about a bank? The Banc of California (BANC) has minibonds that are publicly traded with a current yield of 7.29%.  In case you missed the previous article about Goldman Sachs (GS) minibonds, you should check it out.

The Banc of California 7.50% Senior Notes (BANCL), which trade on NASDAQ, have a maturity date of April 15, 2020, and pay interest quarterly. These minibonds recently closed at 25.70 per share. You could almost think of it as a six year CD.

However, there are several risks:

• These exchange traded notes are not protected by FDIC. They are solely based on the ability of the bank to pay the principal on interest in them.
• The distributions are considered interest and not dividends, which of course prevents the investor from taking advantage of individual or corporate dividend tax benefits.
• If interest rates go up, these will go down  in value.
  
• There is no accrued interest between distribution dates.
• Lack of liquidity. Not many shares trade on a daily basis.

So what are the advantages?

• If the bank goes out of business, these notes have priority over the common stock and any preferred stock of the company.
• Since there is a maturity date, there is some interest rate risk protection since at maturity,  they would be paid of at par value of $25.
• These notes have small denominations, so you can invest unusual amounts (e.g. $16,375), as opposed to multiples of $5,000.
• The payout is fixed and not subject to fluctuation, unlike the payouts on the common stock.

What about the underlying bank behind these securities? The bank recently reported an 88.1% boost in revenues; however, earnings dropped 18.5%. At least Banc of California is now flush with cash, as they just raised $50 million from the sale of common stock, and another $50 million from the sale of tangible equity units. Much of the proceeds will be used to purchase 20 California branches of Popular Community Bank. The bank has been in business since 1941 and has over 70 banking locations.

As long as you can accept the risks, you might want to consider these bank mini bonds, in order to help bring up your overall investment income. If you are interested in investments like this, your should check out the free stock lists at WallStreetNewsNetwork.com.

Disclosure: Author didn't own any of the above at the time the article was written.

By Stockerblog.com

How to Get a 6% Yield from Goldman Sachs (without Options or Margin)

Many income investors think that Goldman Sachs (GS) is a good investment. However, the yield on the stock is only 1.4%. Investors looking for a higher yield might want to consider the Goldman Sachs Notes, often called Minibonds, Microbonds, exchange traded bonds, or exchange traded notes. These are low priced bonds and notes, usually trading around $25, that trade on the major exchanges.

These are very similar to preferred stocks, except that the payouts are considered interest and not dividends, which of course precludes the ability to take advantage of individual or corporate dividend tax benefits.

However, these securities do have some benefits over common stock. First, in the event of company liquidation, they have priority over the common and any preferred stock of the company. Second, they do have a maturity date, so at some point they would be paid of at par value. Third, they have small denominations. Fourth, the payout is fixed and not subject to fluctuation, unlike the dividends on common stocks.

These mini bonds do have some risks. First, the interest rate risk. If rates go up, these will drop in value. Also, unlike regular bonds, sellers who sell between distribution dates will not receive accrued interest. Since they trade flat, the accrued interest should be reflected in the sale price, but may not necessarily be.

So lets look at the Goldman Sachs mini bonds. First, there is the Goldman Sachs Group 6.125% Note due 11/1/2060 (GSF). The note closed at 25.64 today, giving it a yield of 5.97%. The first call date is November 1, 2015. The note has average daily volume of 105,000 which is pretty decent liquidity for one of these notes.

The other one is the Goldman Sachs Group 6.5% Note due 11/1/2061 (GSJ). This traded at 26.47 at the end of the day, which makes the distribution rate of 6.14%, with a first call of November 1, 2016. This note has much lower liquidity with an average daily volume of 46,000.

So if you are wiling to take the interest rate risk and you want to receive a high income from one of the largest investment banks in the world, you may want to consider these Goldman Sachs mini bonds. If you are interested in investments like this, your should check out the free stock lists at WallStreetNewsNetwork.com.

Disclosure: Author didn't own any of the above at the time the article was written.

By Stockerblog.com

How to Get a 6% Yield from Boeing

There are many ways to receive income from non-utility stocks. An example would be Boeing Co. (BA) which pays a 2.6% yield, not real high but better than a CD. But there is another way to invest in Boeing and get a dividend yield of over 6%, an its actually a safer way to invest in the event the company goes out of business, as it will be paid off before the common shareholders.

Boeing has a minibond type investment called CorTS Trust Structured Products Corp. Boeing Company Notes 6.125% Certificates (HYM), which trades on the New York Stock Exchange. This security currently sells at a slight premium to its par value and maturity price of $25.

The annual dividend payout is approximately 1.53 per year, payable semi-annually, giving the stock a yield of over 6%. The stock matures in February of 2033.

Also check out How to Get a 6% Yield from Chesapeake Energy, How to Get a 4.9% Yield from Goldman Sachs, and Lucent Pays a Yield of 13%.

If you want a list of about 20 adjustable rate preferreds, with yields ranging from 1.83% to 8.59%, go to WallStreetNewsNetwork.com.

Disclosure: Author does not own any of the above.

By Stockerblog.com

Minibonds: PINES, QUIBS, PD's, and More

Income investors, are always looking for new and different alternatives to the staid municipal bonds and utility stocks. One interesting alternative is the Minibond. This is a bond that is traded, just like a stock, on the New York Stock Exchange or American Stock Exchange for around $25 per share. They are almost like preferred stocks except that they pay interest instead of dividends and they usually have a specific maturity date. Sometimes they are referred to as PINES (Public Income Notes) or QUIBS (Quarterly Interest Bonds) or QUICS (Quarterly Income Capital Securities) or QUIDS (Quarterly Income Debt Securities). There are even a few that are issued as Perpetual Debt or PDs, which means that there is no maturity date.

The advantages of Minibonds to the issuers are that the interest is deductible to the corporation (unlike dividends on preferred and common stocks, which are not deductible).

The advantages to the investor are first, that the bonds are more secure than preferred stocks (in other words, if the corporation goes out of business, the bonds are generally paid off first before the preferred or common stock). Second, the Minibonds (with the exception of the perpetual debt bonds) have some limited protection against inflation versus preferred stocks in that if interest rates go up after purchasing them, their value will drop; however the par value (usually $25) will be paid back at maturity on the Minibonds. Whereas, preferreds have no maturity. The third benefit is the small denomination, especially when looking at a $2,000 IRA investment. A fourth benefit is that since they are traded like stocks, there is more liquidity than buying or selling a $5,000 bond. However, these are still very illiquid investments. Most have a very low daily volume.

An example is the AT&T Inc. 6.375% Senior Note (ATT), which currently yields 5.9% and pays quarterly. Another is the Viacom, Inc. 6.85% Senior Note (VNV), yielding 6.5%, which also distributes payments quarterly.

WallStreetNewsNetwork.com is working on a list of all the Minibonds, which can be downloaded and sorted. It should be posted in the next few days.

Author does not own any of the above.

By Stockerblog.com