Each month this year we will be providing a list of individual bonds that we see in inventory on Schwab or Fidelity that we think members can buy here and add to their bond portfolios.
The goal would be to continue to grow that bucket as we 'LOCK IN' these yields for many years. In my screen for High Quality, I only looked at bonds that had maturities between 5 and 20 years. I did use a 5.8% floor in the yields. Below that 5.8% level, there is an abundance of issues of the highest quality to choose.
Compared to last year, we have to tamper down our yield expectations. To get anything above 7.0% in investment grade, you have to go after some precarious issues like commercial property managers, media companies, and shaky banks.
I still like the BDC notes here but again, yields have come down and so should expectations. I own many of these issues with MAIN 2026, 2029, Hercules 2026, 2027, Blue Owl Capital Corp (formerly Owl Rock) 2027, and Ares Capital 2028, 2031s being the largest exposures.
We would keep exposures on individual issues below 2.0% and preferably between 0.5% and 1.5% with a 1.0% avg target.
Allocation Update:
My individual bond portfolio sleeve has been filled out but I do continue to reinvest coupons and add a new issue here or there. Some of my government agency bonds, FFCB and FHLB, were called and so I am reinvesting those called proceeds into longer term individual bonds.
As of this writing, my individual bonds sleeve has just over 70 issues for a weighted average yield-to-worst of 6.1%. My calculated duration is now 8.2 years. Weighted avg. years to maturity of 12.9 years. Coupon avg. of 4.1%. Weighted average rating of BBB+.
I would consider this relatively risk-averse positioning.
This is not a recommendation but an illustration for those that want something to benchmark from.
<5 Years:
(The first five are all BDC notes)
Blue Owl Tech 2.5% 2027 (691205GA3), BBB-, YTW: 6.81%
Hercules Capital 2.625% 2026 (427096AH5), BBB-, 6.65%
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