Excellent post, BHN!
One thing that has not yet been discussed is Yield on Cost, which is my real interest in HYLG.
I'll use MAIN for an example. I plugged in the following variables into FAST graphs - $10,000 invested over a 6 year time period with dividend reinvested. Average DGR over that time period is only 5.8%. But... YOC at the end of year one was 9.9%, year two was 11.2%, year three was 13.1% and year four was 15.2%. Yes, it's historical data, but is still very illuminating.
Now, one of my favorite LYHG stocks over that same time period - UNP - gives the following results with the same variable. Average DGR over that time period is a stunning 29%. YOC at the end of year one was 2.1%, year two was 3.1%, year three was 4.1% and year four was 5.0%.
Wow. Considering that I want to have the option to retire in about 6 years, MAIN (or similar HYLG equities) give me a huge advantage over that time period.
It's also clear that eventually the LYHG will catch up and overpass the HYLG equity. When that occurs is the pertinent question. For those of us with short time frames to retirement, that is the key.
Interesting stuff....
One thing that has not yet been discussed is Yield on Cost, which is my real interest in HYLG.
I'll use MAIN for an example. I plugged in the following variables into FAST graphs - $10,000 invested over a 6 year time period with dividend reinvested. Average DGR over that time period is only 5.8%. But... YOC at the end of year one was 9.9%, year two was 11.2%, year three was 13.1% and year four was 15.2%. Yes, it's historical data, but is still very illuminating.
Now, one of my favorite LYHG stocks over that same time period - UNP - gives the following results with the same variable. Average DGR over that time period is a stunning 29%. YOC at the end of year one was 2.1%, year two was 3.1%, year three was 4.1% and year four was 5.0%.
Wow. Considering that I want to have the option to retire in about 6 years, MAIN (or similar HYLG equities) give me a huge advantage over that time period.
It's also clear that eventually the LYHG will catch up and overpass the HYLG equity. When that occurs is the pertinent question. For those of us with short time frames to retirement, that is the key.
Interesting stuff....