TVE - TVA Baby Bonds: Still Better Than Treasuries - Buy Them Before Rates Go Down
2024-01-31 09:30:00 ET
Summary
- Tennessee Valley Authority is a U.S. Government-owned utility with low electric rates, high reliability, and a diverse generation portfolio.
- Since my last article, TVA bonds have performed well, outperforming the iShares 3-7 Year Treasury Bond ETF in terms of total return.
- TVA baby bonds have higher yields than Treasuries and similar state tax exemption. They are a safe choice for investing cash needed in 4-5 years.
TVA Bonds Perform Well, Like The Utility's Operations
It's been about a year and a half since I last covered the baby bonds issued by the Tennessee Valley Authority (TVA) due in 2028 (TVC) and 2029 (TVE). At that time, they had a yield to maturity about 100 basis points above US Treasury notes of similar maturity. These baby bonds can be easier to work with than regular bonds for passive investors because they trade on the stock exchange, pay interest quarterly rather then semi-annually, and do not have accrued interest adjustments when buying and selling. While some investors turn to ETF's to simplify their bond investing, we see that the iShares 3-7 Year Treasury Bond ETF (IEI) has not delivered nearly as good of a total return as the TVA bonds since my last article....
TVA Baby Bonds: Still Better Than Treasuries - Buy Them Before Rates Go Down