This Top “Convertible” Bond Trades for Just 87% of Book Value

Stocks or bonds? For income-focused investors, why not blend the best of both worlds to collect interest and enjoy share price upside? This is the goal of convertible bonds, a “country club” favorite. (Before the holidays you may be tempted to add some convertibles to your portfolio simply so that you can brag about them to friends and family!) Convertible bonds, like the preferred shares we discussed last week , pay regular interest. In this way, they act like bonds. You buy them and “lock in” regular coupon payments. But convertibles are also like stock options in that they can be “converted” from a bond to a share of stock by the holder.… Read more