Because Treasury yields are below 4%, there is no truly safe investment yielding that much, says William Baldwin, managing director at Argent Wealth Management.
There are, however, good ways to capture a substantial amount of income, he says.
"It has no real upside and involves some risk of decline in principal, but it does trade within a fairly narrow range," says Baldwin. "It currently sells at the lower end of its 52-week price range."
Top 10 Holdings
BlackRock Cash Funds Prime SL Agency Shares
Becton Dickinson & Co. Deposit Repr 1/20th Cum Conv Pfd Registered Series A
GMAC Capital Trust I Trust Pfd Secs 2011-15.2.40 Gtd Series 2 Fltg Rt
Barclays Bank PLC 8 1/8 % Non Cum Callable Dollar Pref Shs Sp Am Dep Receipt Repr 1 Non Cum Cal Dlr
Citigroup Capital XIII Tr Pfd Secs 2010-30.10.40 Global Fltg Rt
Wells Fargo & Company Deposit Shs Repr 1/40th 8 % Non Cum Perp Pfd Sh A Series J
Crown Castle International Corp 6.875 % Cum Conv Red Pfd Registered Series A
Wells Fargo & Company Deposit Shs Repr 1/1000th 5.85 % Non-Cum Perp Pfd Shs A Series Q
Citigroup Inc. Deposit Shs Repr 1/1000th Non-Cum Perp Pfd Shs Series K
PNC Financial Services Group, Inc. Deposit Shs Repr 1/4000th Non-Cum Perp Pfd Shs Series P
Baldwin also suggests considering closed-end municipal bond funds, which got hammered in January when the municipal bond market declined. "As a result of the new tax law, which reduced corporate tax rates, banks and insurance companies shed their muni bonds," he says
One to consider: The BlackRock Muni Intermediate Duration Fund (MUI), which seeks to provide common shareholders with high current income exempt from federal income taxes. The fund seeks to achieve its investment objective by investing at least 80% of its assets in municipal bonds exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax).
Under normal market conditions, the fund invests at least 75% of its assets in municipal bonds rated investment grade and invests at least 80% of its assets in municipal bonds with a duration of three to 10 years at the time of investment. The Fund may invest directly in such securities or synthetically through the use of derivatives.
MUI sells at a 12.82% discount to NAV (as of July 18, 2018) and yields 4.12% free of U.S. income tax.
Top 10 Holdings
TOB 5 735389D54 PTSGEN 144A
NEW JERSEY ST TRANSN TR FD AUT 5.5 06/15/2031
CHICAGO ILL O HARE INTL ARPT R 5 01/01/2023
TOB 5 13063DFM5 CAS 144A
GOLDEN ST TOB SECURITIZATION C 5 06/01/2033
NEW JERSEY ST TPK AUTH TPK REV 5 01/01/2032
NEW JERSEY ST TRANSN TR FD AUT 5.25 06/15/2032
NEW JERSEY ST TRANSN TR FD AUT 5.25 06/15/2031
ATLANTA GA WTR & WASTE WTR REV 5 11/01/2032
PUCS 2.88 CTSMED 20774YYF8
Got questions about the new tax law, Social Security, retirement, investments, or money in general? Want to be considered for a Money Makeover? Email Robert.Powell@TheStreet.com.