While recent stock market's losses have brought down all the major indexes to levels below January, I have been adding Blue Chip positions/fund (check holdings of the ETF - symbol HDV) to client IRA accounts. Secondly, these companies are even more attractive as the yield on 10-year Treasury bonds has fallen to 1.4%.
So, even though stock fundamentals remain ho-hum, I feel that select dividend paying stocks and stock funds (generally yielding over 3%) are worth a taste. Yea, I know that most of the dividend payers forgo growth, but in the current environment there is not much reason to take on risk to try to achieve a whole lot of growth. Hopefully, the election will change that.....regardless of the winner.
My view is that the previous policies have resulted in a great deal of uncertainty while creating "The Villains of Corporate America". The results are being reflected in pathetic job growth and headlines with subtitles that continue to include the need to expand government regulations that add burdensome cost and misdirect agendas. There also seems to be a lack of leadership with regard to the entire process. Furthermore, the previous efforts to heap mountains of cheap money on low-brow economic stimulus to support such programs like cash for clunkers, benefit extensions and incentives for not making mortgage payments have not worked. Finally, the green jobs that were supporting the green shoots" have turned in brown dodo.
Meanwhile, the news about Greece (which as a country is actually worth less than half of the value of FACEBOOK) continues to distract from the problems in the USA. If the US economy was on a better track and a little healthier, Greece would be a minor blip on the radar.
Below is an article about a couple of recent corporate offerings that show how some corporations are taking advantage of low interest rates
Kraft Sells $6 Billion Of Bonds As Treasurys Rally
Published May 30, 2012
Dow Jones Newswires
NEW YORK – Undeterred by the flight to safety that pushed Treasury yields to all-time lows, Kraft Foods Inc. (KFT) sold the fourth-largest corporate bond offering of 2012 on Wednesday.
The $6 billion, four-part deal was composed of three-, five-, 10-, and 30-year notes. They were priced to yield 1.714%, 2.289%, 3.608%, and 5.046%, respectively, with spreads over Treasurys of 1.35 percentage points, 1.60 points, 2.0 points, and 2.35 points, respectively. The yield on each fell 0.05 points from earlier guidance, suggesting strong demand.
The bonds carry triple-B ratings. Bonds with those ratings might risk a selloff when investors are rushing to safe havens, but market participants say Kraft is able to benefit from the decline in yields thanks to its household-name status.
Jesse Fogarty, portfolio manager at Cutwater Asset Management, said high-quality industrial bonds are receiving strong demand right now, as seen by the $38 billion order book last Thursday for the $9.8 billion deal from United Technologies Corp. (UTX).
Kraft and others who sell staple consumer goods "will be viewed as a safe haven from Europe and will be a source of yield as Treasury yields fall," Fogarty said.
T
he UTX deal was the largest bond offering of 2012. Spreads on parts of the six-part deal widened Wednesday, but they have narrowed dramatically from levels last week. The spread on the 10-year piece was 1.13 percentage points in late trading, down from 1.35 at issue, according to MarketAxess.
Kraft is also benefiting from being the only sizable issuer in Wednesday's new-deal market, said Timothy Cox, executive director of debt capital markets at Mizuho Securities, a senior co-manager on the sale.
"We've seen that these big trades can get done," he said. "[And it certainly helps] when you have a rifle-shot approach, or a single-trade to focus on."
The multiple-tranches also allow Kraft to access a range of different investment accounts.
The larger offering brings monthly issuance to about $80 billion, according to Dealogic, matching expectations at the beginning of the month.
The Kraft deal was open only to qualified institutional investors. It was run by Barclays, Citigroup, Goldman Sachs, J.P. Morgan, and the Royal Bank of Scotland.
Kraft, which sold the bonds through Kraft Foods Group Inc., intends to use the proceeds for general corporate purposes, and to repay some debt.
