Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
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The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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A 15% Yield Originating from a
Classic American Company |
Published:
July 30, 2008
Lehman ABS 7.55% Ford (NYSE: XKN, $12.57)
are preferred
shares based on Ford (NYSE: F) bonds that come due in 2097.
In 2001, brokerage firm Lehman Brothers (NYSE: LEH) bought a
quantity of these bonds and repackaged them for sale to
individual investors. Hence, although the repackaged shares were
issued by Lehman, interest and principal payments are sourced
from Ford.
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The shares pay a semi-annual dividend of
$0.944 for $1.888 yearly. At current prices that works out to an
astounding yield of 15%. Payouts are taxed as ordinary
income and are best held in a tax-deferred account.
When the units were issued, they sold for $25 each and carried
an investment-grade rating of "BBB+." Because of the
well-publicized woes of the U.S. auto industry, the shares now
change hands at about 50% of their original value, and Standard
& Poor's rates them just below investment grade at "BB-."
The shares are callable at any time at $25. However, with the
shares trading more than $10 below that amount, the possibility
of them being called is remote.
Earlier this year, Ford seemed on track to return to
profitability in 2009. The company had successfully wrung
concessions from labor unions, which reduced healthcare
liabilities on its balance sheet by more than $20 billion.
In March, perhaps sensing a turnaround, billionaire investor
Kirk Kerkorian offered $8.50 a share for 20 million shares of
Ford's stock (for a total holding of about 5.5% of the company).
His offer was at a premium to where the shares were trading.
Despite a drop in Ford's share price since that time, Kerkorian
has so far not withdrawn his bid.
The rising price of crude oil and gasoline has, however, eroded
Ford's outlook. In late May, the company announced it would not
turn a profit in 2009 and was cutting North American vehicle
production.
It also made the decision to slash highly profitable pick-up
truck production in favor of building far less remunerative
fuel-efficient cars. Given record-high gas prices, cars have
been far more popular than trucks and SUVs. Ford President Alan
Mulally speculated that the consumer shift away from trucks was
a "structural" change, also dimming future prospects.
While Ford will likely not be profitable until 2010 at the
earliest, the company does not seem in imminent danger of
bankruptcy. It has roughly $29 billion in cash, an amount that
should cover the company's expenses and debt obligations over
the next few years until it turns a profit.
Despite Ford's financial woes, then, the company appears to be
solvent and able to meet its debt payments for the foreseeable
future.
Good investing!
Carla Pasternak
Editor
High-Yield Investing
http://www.StreetAuthority.com
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Investing. |
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