Convertible Bonds
Convertible bonds may provide more competition for REITs. These securities offer yields comparable to those of many REITs as well as appreciation potential—if the common stock into which these bonds may be converted rises substantially. Convertible bonds provide the security of a fixed maturity date in case the underlying common stock fails to appreciate in value. They can be relatively attractive investments.
The problem with convertibles is that most companies just don't issue them. If they can be found, and if the underlying common stock appears to be a good investment, the convertible may also be a good investment. Some REITs have occasionally issued convertible securities, including convertible preferred stock. The investor ...
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