My father owns mainly 1 stock. This stock pays a dividend which he lives off of. How do I find a good bond ?
Question:
you are going to need a broker
Ford bonds are good, Calpine too
Ford bonds? I guess if you can get past the junk rating and the risk that you won't get paid back...
Why would you want to do this to your father? Dividends are taxed at 15%, interest is taxed at ordinary income tax rate. i presume he will incur capital gains tax when you sell the stock. If he's happy, then leave him be. If you're concerned about the stock losing value, buy some protective puts.
The other option to you is to possibly look into municipal bonds. While it is a bit risky for your father to be in one stock and rely on the dividends, it is also nice to have that money only taxed at 15%
With municipal bonds you could effectively find steady interest that is federally tax-free (and possibly free of state tax as well). You may have trouble finding a muni with a 5-6% yield but somewhere in the 3-4% range is not out of the question and that may even come in the form of an insured bond.
But my concern is that you said the stock is highly-appreciated. So by selling this stock you are also triggering capital gains taxes just to transfer the money into another vehicle. It wouldn't make much sense to sell some stock, have the gain taxed, and then reinvest in another taxable dividend/interest bearing investment other than for the sake of diversification or principal protection. That is why I think other than hedging the stock with options a muni bond portfolio would be the way to go so you can reduce the overall tax consequences.
As far as where you can do this, virtually any brokerage account will allow you to purchase bonds. I know Ameritrade will for sure.
If you are only looking at 5-6% why not go with an online money market which is a sure bet, and has no brokerage fees. Capital One is currently at 5%. There is a whole list of reputable companies that offer high intrest savings accounts.
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