High-yield bonds explained
High-yield bonds are issued by companies with lower credit ratings – below investment grade. They pay more because the issuer is less certain to pay.
What sets them apart
- Rated below BBB- / Baa3 by rating agencies.
- Higher interest to compensate for the chance of default.
- Prices can move more with the economy than high-grade bonds.
Compare yield with risk, not yield alone
A higher yield is the market's price for more risk. Looking at yield next to a risk level, and spreading money across many issuers, gives a fuller picture. Interest on company bonds is taxed federally and by your state.
See where they sit
IncomeGrid has 40,000+ investment options screened, each with a risk level 1–5, and example portfolios that spread money across many issuers. IncomeGrid ranks every item by yield after tax for where you live: federal, state and each investment type (Treasuries, municipal bonds, corporate bonds, funds, REITs and filed offerings are each taxed differently).
Compare bonds by yield and risk →
Sources
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