You don’t need an options account or any special trading access. You don’t even need a lot of money to score this opportunity. All you need is about $25.
There are over 150 of these opportunities hiding in a small corner of the market that most people don’t even know exists. And the yield is guaranteed and can be safer than any dividend.
You can buy this income product directly in your brokerage account, and in many cases commission-free.
Sounds too good to be true, right?
It doesn’t have to be.
I’m talking about investing in exchange traded debt.
Exchange Traded Debt Verses Stocks
When companies need to raise money, they have two options—equity or debt.
Equity financing is when a company sells a stake in the company in return for capital. This is often done by issuing new shares and selling them to investors the usual way—in the stock market.
Debt financing is different. A company borrows money from investors and pays it back over a certain term or time frame… while also paying interest. This is done in the bond market.
Buying a corporate bond is a loan to a company, just as buying a Treasury bond is a loan to the US government.
Bonds have a set face value, known as the par value. This is the amount of money being borrowed, and the amount that will be paid back at the end of the term.
The bond also has what is known as a coupon. This is the amount of interest—the percentage yield—you will receive every year.
These features are what make debt income more guaranteed than dividends paid on a company’s stock.
Because a bond’s face value is set, and is not subject to the whims of the market like stock prices are.
It’s a similar deal for the coupon rate. The amount of interest income you receive does not change, unlike a dividend that can be cut or suspended at any time without notice.
Corporate bonds traditionally have a par value of $1,000. That can be a minimum amount too high for many investors. But exchange traded debt only has a par value of $25.
Plus, buying exchange traded debt is as simple as buying a stock. All you need is the ticker and a brokerage account.
And even in a worst-case scenario where the issuing company goes bankrupt, debt holders are first in line to be made whole.
There Are over 150 Choices on the Market
Companies ranging from QVC to Ford, from Chicken Soup for the Soul to Merrill Lynch, offer these opportunities.
Although some of the companies also pay dividends on their stock, that’s not always the case.
That means you’ll be able to unlock a guaranteed stream of income from a company without a dividend. And in some cases, from a company that’s not publicly traded.
It’s worth repeating: These are guaranteed payments, when that’s not necessarily the case with dividends.
Just look at Ford Motor Co. (F).
Ford is a giant in the automotive industry. But in both 2006 and 2020 it was forced to suspend its dividend. Investors who bought the stock in 2006 didn’t see another dividend payment until 2012. And the reinstated dividend didn’t recoup its prior high until 2013!
But you can skip dividend roulette with Ford because it has exchange traded debt on the market right now.
Ford Motor Company 6.2% Notes due June 1, 2059 (F-B)
Ford Motor Company 6% Notes due December 1, 2059 (F-C)
In 2020 and 2021, while Ford shareholders were collecting nothing, these note holders were collecting 6.2% and 6% yields, respectively.
Finding exchange traded debt might take a little more effort, but it pays off in added income security.
In the January issue of Yield Shark, I showed readers my favorite exchange traded debt on the market today. It yields a guaranteed 7.8% every year. Although the company can buy the notes back from us sooner, I don’t expect that to happen.
There’s still time to get in and collect the next payment. Click here for all the details on how to get access to Yield Shark.
For more income, now and in the future,