The party is over for junk bond investors

The party is over for junk bond investors



This is a good article explaining why junk bonds like the ETF, JNK, are not reliable anymore.  A lot of the dividend money comes from oil and mining companies which are not doing well.  While the dividend rate of JNK is around 6% and distributed on a monthly basis, the price of the stock has been slowly declining.  So, the loss of capital may be about equal to your dividends now.  



A better alternative is PFF, the preferred stock ETF.  It pays around 6% annually in monthly installments also, but the price of PFF is more stable although it has fallen slightly.  I own PFF myself, and I think it is good idea for part of your portfolio to be designated for income money especially in a volatile stock market.