16 Recommended Corporate Bonds to Buy 2024

Our Recommended Bonds to Buy 2024 Preview

Bondsavvy's 16 most recent recommended corporate bonds include bonds issued by companies in the medical devices, homebuilding, energy, agriculture, technology, leisure, retail, infrastructure, and mining industries. Eight of these new recommendations had investment grade bond ratings, and eight were high yield bonds.

Of these 16 recommended bonds, four bonds had 2027 or 2028 maturity dates; eight had 2033-2037 maturity dates; and four bonds were due beyond 2040. Subscribe to Bondsavvy to learn the names and CUSIPs of all of the 65 corporate bonds we rated buy or hold as of our most recent bond recommendation update.

Figure 1 shows how, as of November 19, 2024 at 12:00pm EST, our best bonds to buy 2024 were still trading near their pick date prices. It also shows the range of bond YTMs and issuing company leverage ratios. While YTMs are helpful metrics, our active fixed income investment strategy seeks to achieve returns higher than a bond's yield to maturity. View our corporate bond returns page to see how 76% of our exited recommended bonds have outperformed the leading corporate bond ETFs.

Figure 1: Bond Prices of Our Best Corporate Bonds To Buy 2024 -- Pick Date vs. November 19, 2024

Sources: Pricing data are from Fidelity.com. *Leverage ratios are Bondsavvy calculations based on each company's most recent SEC filings as of September 5, 2024, except the November 14, 2024 picks, which are as of that date.

A key part of our fixed income investment strategy is to identify bonds with high coupons relative to their risk and with upside potential. As shown in Figure 1, 12 of the 16 best bonds to buy 2024 had leverage ratios of 2.1x or less, a conservative level. In some cases, bonds rated below investment grade can have lower leverage ratios than those issued by investment grade companies. These are the types of opportunities where investors can capture a higher potential total return with limited default risk.

Can I Still Buy the Recommended Corporate Bonds Near the Pick Date Price?

As shown in Figure 1, as of November 19, 2024, the answer was generally 'yes.' Over the years, we have implemented several actions to limit the market impact of our recommended corporate bonds. To date, these actions have been successful.

Owning individual bonds vs. bond funds is the more cost-effective way to invest in bonds, as investors do not pay recurring fees based on a percentage of what they invest. In addition, bond funds incur significant trading costs. Bond funds do not disclose the amount of these costs and exclude them from the "expense ratio" fund managers, such as Vanguard, trumpet. By taking actions to limit our market impact, we have enabled our subscribers to purchase bonds at competitive prices and to maximize their corporate bond returns.

Click here to get four prior bond pick updates.

Yields to Maturity Summary of Our Buy/Hold Recommended Bonds to Buy

On November 19, 2024, the 65 bonds we rated either buy or hold included 35 high yield corporate bonds and 30 investment grade corporate bonds. Please note that we updated our buy/hold ratings on the September 5, 2024 Super Bondcast after companies reported their Q2 earnings. We will be updating the buy/sell/hold ratings of each current Bondsavvy recommendation during the December 12, 2024 edition of The Super Bondcast.

Figure 2 shows a YTM distribution for our 35 recommended high yield corporate bonds: 

Figure 2: Distribution of High Yield Bond Yields to Maturity of Bondsavvy Recommendations -- As of November 19, 2024

Source: Fidelity.com and FINRA TRACE data

Many investors favor investment grade corporate bonds vs. high yield bonds due to their perceived higher level of safety. While certain high yield corporate bonds may have higher default risk than investment grade bonds, high yield bonds generally have lower interest rate risk. This is due, in part, to their higher coupons, shorter-dated maturities, and higher credit spreads.

When the US Federal Reserve hiked interest rates in 2022 and 2023, the worst-performing bonds were generally investment grade corporate bonds due to their sensitivity to US Treasury yields. Many high yield corporate bond prices remained steady, with some even achieving positive returns.

In addition, investors should not be led to believe that all investment grade bonds have lower default risk than high yield bonds. As we discuss in our corporate bond ratings blog post and imbedded YouTube video, bond rating methodologies have flaws. There are many cases where bonds are rated investment grade despite the issuer having inferior financials to many high yield bond issuers.

Investors would be surprised that there are many investment grade issuers with leverage ratios above 4.0x and many high yield bond issuers with leverage ratios below 2.0x.

Figure 3 shows the distribution of November 19, 2024 YTMs across the 30 investment grade corporate bonds we rated buy or hold.

Figure 3: Distribution of Investment Grade Bond Yields to Maturity of Bondsavvy Recommendations -- As of November 19, 2024 (30 Bonds)

Source: Fidelity.com and FINRA TRACE data

While our investment grade corporate bond recommendations have, in general, lower YTMs than our high yield bonds, many of our investment grade bonds could achieve higher total returns than certain high yield corporate bonds.

There are two primary reasons for this. First, many of our investment grade corporate bonds now trade between 58% to 70% of their $1000 face value. Should these bonds approach par value well in advance of their maturity dates, such bonds could achieve double-digit annual returns from now.

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In addition, investment grade bonds are generally not subject to bond call schedules in the way high yield corporate bonds are. Investment grade bonds typically have make-whole-call provisions. Such provisions are onerous to bond issuers and rarely invoked, which enables certain investment grade bonds to trade well above their par value. Since most high yield bonds are subject to call schedules, their upside is often limited when compared to investment grade corporate bonds.

Please read Section 6 of our when to sell bonds blog post for more information on the differences between call schedule bonds and make-whole-call bonds.

Why Own Our Best Corporate Bonds To Buy 2024

Owning individual corporate bonds enables investors to lock in high income for a specific time period and to have the opportunity for capital appreciation. Individual corporate bonds also, at maturity, provide for a return of the $1,000 face value for each bond you own. With individual corporate bonds, investors can build bond portfolios suited to their investment objectives and risk tolerance.

Since corporate bonds are priced as a percentage of their face value, investors can evaluate a bond's price, YTM, and credit spread and compare these metrics to the bond issuer's financials. This financial analysis is the heart of the Bondsavvy subscription and enables us to identify bonds that can achieve strong total returns over the long term. This analysis is not possible when investing in bond funds and ETFs, as we discuss below.

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Approximately 9,000 individual corporate bonds are available for online investing each day. Our corporate bond recommendations cut through the clutter to identify bonds that offer high coupons and upside potential relative to their risk.
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A compelling alternative to money markets, CDs, and bond funds

In the September 2024 Fed dot plot, the US Federal Reserve projected two points of additional interest rate cuts through 2026. Should this happen, popular money market funds such as Vanguard VMFXX will see their yields fall in lockstep with the Fed funds rate. In addition, since Vanguard VMFXX targets a net asset value per share of $1.00, VMFXX cannot have capital appreciation. Some CD rates may currently seem attractive; however, CDs often pay their income at the end of their term (compared to corporate bonds, which pay interest semi-annually), can come with onerous call provisions, and lack capital appreciation opportunities.

Mega bond funds such as Vanguard VBTLX are not fixed income investments. They do not pay a fixed coupon and do not return an investor's principal at maturity, as they do not have a maturity date. Bond funds such as VBTLX own thousands of bonds, which drives muted (and often low) returns and makes investors unable to build a portfolio that fits their investment objectives. Further, since bond funds and ETFs do not trade relative to a par value and lack underlying financial metrics, investors cannot assess whether a bond fund investment represents a compelling value.

Industry Groups of Our Bond Issuers

As stated above, investors owning individual corporate bonds can build a portfolio based on their investment objectives and risk tolerance. Assessing risk is always a big part of any investment, but so is attempting to capture growth opportunities. Owning corporate bonds across a variety of industries enables investors to mitigate risk and to gain upside exposure.

Figure 4 shows the industries included across our existing buy/hold recommended bonds and the number of recommended issuing companies within each industry group.

The tailwinds and headwinds impacting the 15 different industries represented by our issuing companies are always changing. For example, as commodity prices rose during 2022, it drove record financial performance for several of our issuers in the metals & mining and energy industries. This strong financial performance enabled bonds issued by these companies to hold steady (or limit price declines), as the rest of the bond market experienced one of the worst fixed income markets of all time.

Figure 4: Number of Issuers by Industry for Bondsavvy's Current Buy/Hold Recommended Bonds to Buy

Bond Maturity Date Summary of Our 65 Recommended Bonds

Bondsavvy's service is unique among corporate bond research, as our bond recommendations are at the individual bond, or CUSIP, level. Most fixed income research evaluates the creditworthiness of bond issuers; however, it lacks recommendations on what specific bonds investors should buy.

Click here to get four prior bond pick updates.

Some large bond issuers may have over 50 bonds outstanding, which is why providing CUSIP-level recommendations is so important. In addition, over time, we have seen how different maturity dates can drive myriad investment outcomes.

Today's corporate bond market can support many different investment objectives. There are investment grade bonds with solid coupons and three- to five-year maturities. There are longer-dated investment grade bonds that offer significant potential capital appreciation. There are also high yield bonds that offer higher coupons, lower interest rate risk, and capital appreciation opportunities.

Figure 5 shows the distribution of maturity dates of Bondsavvy's 35 high yield corporate bond recommendations as of November 19, 2024. High yield bonds are typically issued with initial maturity dates of five to ten years. As expected, 23 of our 35 recommended bonds (66%) had maturities of approximately eight years and fewer as of November 19, 2024.

Figure 5: Number of Bondsavvy High Yield Bond Recommendations by Maturity Date Range -- As of November 19, 2024

Figure 6 shows the maturity date distribution of Bondsavvy's 30 investment grade corporate bond recommendations. Nineteen of these bonds have maturity dates of 2040 or later. Many of these bonds trade well below par value and offer significant upside over the long term.

As interest rates began rising in 2022, we were able to add shorter-dated investment grade bonds that offered mid-single-digit YTMs. These bonds don't offer the upside of the longer-dated bonds, but they also don't generally have the significant pricing volatility often associated with long-dated bonds.

Figure 6: Number of Bondsavvy Investment Grade Bond Recommendations by Maturity Date Range -- As of November 19, 2024

Why Own Corporate Bonds Now

We strongly advocate investors build bond portfolios over time; however, as of this update, there are several factors making now a compelling time to invest in individual corporate bonds:

• The S&P 500 now trades near a 30x price-to-earnings (P/E) ratio compared to approximately 19x ten years ago, according to Gurufocus.com.
• The S&P 500 dividend yield was 1.22% on November 18, 2024, a level not seen since the dot.com bubble reached its peak in early 2000, according to Gurufocus.com
• Since bottoming out on September 16, 2024, 10- and 20-year US Treasury yields have increased over 79 and 69 basis points to 4.42% and 4.70%, respectively, on November 18. This has caused many investment-grade corporate bonds to fall several points, providing values not seen since the summertime.
• For example, a 30-year, investment-grade bond issued by one of the world's largest technology companies had a 5.70% YTM on November 19, 2024 and was priced in the low 80s. Bonds like this provide investors an opportunity to lock in high, long-term income and benefit from potential capital appreciation.
• Money market yields have fallen about 50 basis points (one-half percentage point) over the last several weeks and could fall into the 3s should the US Federal Reserve cut rates further per the September 2024 Fed dot plot.
• Income distributions for bond funds and ETFs vary monthly and do not enable investors to lock in long-term income, as can be done with individual corporate bonds. 
• Since bond funds and ETFs do not trade relative to par value and lack underlying financial metrics, investors cannot assess whether bond funds or ETFs are trading at compelling values.

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