Now to the securities that I mentioned above. Medley LLC 7.25% Senior Note (MDLQ) trades at its $25 par value, yields 7.25 percent, and pays interest four times a year. The security is unrated and would be below investment grade if it were. The parent company, Medley Management (MDLY), is a credit-focused asset management firm. The second security is Prospect Capital 6.25% Note (PBB). It currently yields 6.12 percent, is rated BBB-, and pays interest four times a year. Notes pay interest, so the income from these securities is not “qualified.
What's especially nice about MDLQ and PBB is that they can be bought and sold just like stocks. Their prices are stable but will tick up or down inversely with of interest rates. Of course price movement doesn't matter if you hold them to maturity in 2024. The main risk is company specific – that they won't be able to pay their interest and at maturity their principal. Most people find that risk acceptably low. Bottom line: These aren't the only attractive securities. There are still good choices for those who need investment income or want to lower portfolio volatility. They are not too good to be true.
