Dividends & Income Digest: These Aren't Your Grandpa's Investments - Adam Aloisi On Bonds

After a bit of a hiatus in August, the High Yield Income Ideas series is back. This time, Adam Aloisi gives us the lowdown on bonds. He's written extensively on income investing for Seeking Alpha, focusing most recently on broad dividend equity strategies, REITs, closed-end funds and market sentiment relative to dividend growth investing.
With bonds, Adam says, no matter how "safe" they may seem, you still need to know what you're doing. In other words, these aren't your granddad's bonds - you need to have a pretty sophisticated knowledge level before taking the plunge into these so-called conservative instruments. Not to worry, though. Adam provides plenty of food for thought here, and some useful questions investors can ask themselves to help make sure they understand what they're getting into, and why.
Seeking Alpha: What is your perspective on bonds in general right now?
Adam Aloisi: Given the multi-dimensional properties of bonds, it's a bit difficult to say anything one-dimensional about them. One must remember that there is always huge difference regarding the risk attributes of a bond with 1-2 year maturity versus one with 10-20 year maturity. Similarly, there is huge difference between the principal risk of a AAA investment grade bond and a bond with CCC "junk" credit. Critics tend to use a very wide brush over a space where something much more fine-tuned must be utilized.
Still, with yields continuing to hover near... Read more