{"id":73709,"date":"2023-10-17T16:42:32","date_gmt":"2023-10-17T20:42:32","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/apple-bonds-are-yielding-more-than-5-the-stock-has-a-0-5-dividend-yield\/"},"modified":"2023-10-17T16:42:36","modified_gmt":"2023-10-17T20:42:36","slug":"apple-bonds-are-yielding-more-than-5-the-stock-has-a-0-5-dividend-yield","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=73709","title":{"rendered":"Apple bonds are yielding more than 5%. The stock has a 0.5% dividend yield."},"content":{"rendered":"
\n

Investors are flocking to bonds issued by (almost all) of the Magnificent Seven companies, drawn in by some of the juiciest yields seen on such high-quality names.<\/p>\n

Select Magnificent Seven 10-year bonds currently yield anywhere from about 5.20% for Apple Inc.
\n AAPL,
\n -0.88%<\/bg-quote>
\n to 5.75% for Meta Platforms Inc.
\n META,
\n +0.89%<\/bg-quote>
\n In comparison, the implied dividend yield on Apple\u2019s stock at current prices was 0.54%, while Meta doesn\u2019t pay a dividend.<\/p>\n

\n

From the archive (October 2023):<\/strong> Magnificent Seven tech stocks haven\u2019t been this cheap in six years, Goldman Sachs strategists say<\/p>\n

The remaining five are Amazon.com Inc.
\n AMZN,
\n -0.81%<\/bg-quote>,<\/span>
\n Alphabet Inc.
\n GOOGL,
\n +0.45%<\/bg-quote>,<\/span>
\n Nvidia Corp.
\n NVDA,
\n -4.68%<\/bg-quote>,<\/span>
\n Microsoft Corp.
\n MSFT,
\n -0.17%<\/bg-quote>
\n and Tesla Inc.
\n TSLA,
\n +0.37%<\/bg-quote>
\n Tesla has no outstanding bonds after convertibles issued in the past were converted into stock.<\/p>\n

Of that group, only Microsoft and Nvidia pay dividends, but the implied yield on Microsoft\u2019s stock is 0.90% and on Nvidia\u2019s stock is just 0.04%.<\/p>\n

The companies\u2019 bonds have fallen in price as their yields have climbed after the Federal Reserve steadily raised its key federal-funds rate to a target range of 5.25%-5.5% in 11 moves started in March of 2022. That\u2019s because of the inverse relationship between bond prices and yields and not because of any credit-quality issue. <\/p>\n

For investors, it means the opportunity to add these high-yielding, high-quality names to portfolios at a discount.<\/p>\n

As the following charts from data solutions provider BondCliQ Media Services show, there has been steady buying in most of the bonds over the last 10 days, even as their stocks have pulled back a bit. <\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n
<\/div>\n<\/figure><\/div>\n

Nvidia is the outlier with greater net selling over the period, but spreads between some of its bonds over the yields of equivalent \u201crisk-free\u201d Treasury bonds have tightened over the period. The stock, meanwhile, was down Tuesday as the U.S. said it would expand restrictions on semiconductor sales to China. <\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n
\n \"\"\n <\/div>\n<\/figure><\/div>\n

Apple has the most outstanding debt in the group.<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n
\n \"\"\n <\/div>\n<\/figure><\/div>\n

A selloff in U.S. government debt was accelerating late Tuesday, sending most Treasury yields either further above or toward 5%. <\/p>\n

See:<\/strong> Long-term U.S. Treasury yields may resume their march higher despite recent bond-market swings, BlackRock says<\/p>\n

The benchmark 10-year was up 14.4 basis points at 4.853% after September\u2019s stronger-than-expected retail sales report, and is on pace for its largest one-day jump since at least Sept. 21. <\/p>\n

Two- and 10-year yields are both heading for their highest closing levels in 16 to 17 years.<\/p>\n

Read also: <\/strong>Corporate bonds are on sale. How to add cheap Apple, Disney and Microsoft bonds to your portfolio.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Investors are flocking to bonds issued by (almost all) of the Magnificent Seven companies, drawn in by some of the juiciest yields seen on such high-quality names. Select Magnificent Seven 10-year bonds currently yield anywhere from about 5.20% for Apple Inc. AAPL, -0.88% to 5.75% for Meta Platforms Inc. META, +0.89% In comparison, the implied […]<\/p>\n","protected":false},"author":1,"featured_media":73710,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-73709","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nApple bonds are yielding more than 5%. 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