| | | Re: KTBA Trust - A Bond Investment Yielding 6.1% Backed By AT&T
I don't own KTBA and have a very small position of T. But have a friend who owns T (he got me to take a small position in T) and asked him why not KTBA. His response,
- He likes that instability. His view is T has some upside in stock price going forward as they work through their debt load. So he sees appreciation in the stock price -- yeah, we know where the stocks been, but he says he's looking at where he thinks it can go
- He also uses that current instability in the market price to buy on the dips and then is able to squeeze more juice (yield %) or capture capital gains.
- At current price KTBA is paying about 6.15% and T is paying 6.95%, so he's rewarded and thinks the T div is secure and could actually increase.
- He also does some covered calls on his T, giving him a little more juice from his T holdings. Can't do that with KTBA. He buys well out of the money calls, if they do get called, he has a nice gain to pocket.
- He also sees T as more liquid, so should he want or need to sell he doesn't worry about the buy/ask spread.
Anyway, that's his take. He's done pretty well for himself so can't say I disagree with his thoughts. |
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