Patrick R. McDowell, CFP®, AIF® was quoted in a US News & World Report article by Rebecca Lake discussing the 7 best corporate bonds to buy and hold for 2019.
Allegiant Travel Co. (ticker: ALGT)
Assigned a BB- rating by Standard & Poor’s, Allegiant Travel may be an under-the-radar choice for corporate bond seekers. Patrick R. McDowell, research analyst and portfolio manager at Arbor Wealth Management in Miramar Beach, Florida says smaller carriers like Allegiant have redefined the airline business model, specifically pointing out Allegiant’s focus on profitable flights rather than expanding routes to maintain market share. The current yield to maturity, which represents the total return expected when the bond is held to maturity, is 4.5 percent, making these bonds attractive in the near term, with a stable outlook for the long term. McDowell’s company recently enhanced its position in Allegiant with bonds maturing in mid-2019.
Icahn Enterprises LP Common Stock (Ticker: IEP)
Icahn’s holdings are far-reaching, with investments stretching from real estate to metals. With a BB+ S&P rating, McDowell says these bonds have grown more attractive in a low interest rate environment. Current yield ranges from 5.5 percent to 6 percent annually, depending on purchase price, with bonds reaching maturity in August 2020. “This bond is callable, which scares a lot of potential investors away,” McDowell notes, “But the yield to call is currently far better than the yield to maturity, so we wouldn’t be disappointed if these bonds were called away.” Yield to call is what a bond yields if you buy and hold it until the call date, assuming the call occurs before maturity.