My thoughts are that with the capital appreciation of the bonds when they mature in 1 to 2 years plus the dividend I can achieve 10 to 12% return
What do you think of this ?
Can you make any suggestions as to three
possible bonds that will fulfil this criteria?
Thank you
The bond market is vast, and there are thousands that would meet this criteria. The issue we have in such a recommendation is that many will not be available for sale at brokerages. The strategy is fine, if one can find quality bonds at a discount, but this may prove very difficult. Canada 2-year bonds are trading below $100, but yield to maturity (YTM) is 4.6%, not 10% to 12%. One can boost YTM by going for lessor quality, but this of course adds risks. Corporate bonds will yield more, but not likely 12% unless one moves into 'junk' territory. We are happy to comment on any individual bond request, but would request at least a small list at least of what your broker has available in inventory. CBO as a corporate bond fund is another option, for a diversified mix of many bonds in a laddered strategy. It only yields 3.1%, but could see decent capital gains if rates begin to decline.