Sprint Bonds Offer 8% Yields

| About: Sprint Corporation (S)

Sprint Nextel Corporation (NYSE:S) is the third largest wireless carrier in the United States, competing with much larger carriers Verizon Communications (NYSE:VZ) and AT&T Inc. (NYSE:T). Sprint has seen strong subscriber growth over the past few years, growing from 36.5 million to 52 million in just two years.

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Sprint stock doesn't pay a dividend, unlike Verizon and AT&T, which both pay a dividend currently topping 4.5%. The stock price never truly recovered after the financial crisis of 2008, currently trading at $4.82 per share.

S Chart

S data by YCharts

At this point the stock remains fairly speculative, as Sprint executes a turnaround strategy. And with no dividend, the stock is a tough sell. But one place an investor can find solid yields from Sprint is in its bonds.

CUSIP Coupon Maturity Price Yield
852061AM2 11.5% 11/15/2021 $125.00 7.663%
852061AA8 9.25% 04/15/2022 $107.00 8.182%
852060AD4 6.875% 11/15/2028 $93.110 7.620%
852060AT9 8.750% 03/15/2032 $100.554 8.689%
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* Data from FINRA

The highest yield is offered by the longest term bond, maturing in just under 20 years. A yield of 8.689% is nearly twice the dividend yield of the larger telecoms and three-and-a-half times the 20-year treasury yield.

03/15/2032 Sprint Bond Price

The 2032 bond was trading below $80 at the beginning of the year, but even trading near par offers a high yield.

Conclusion

Sprint is in the middle of a turnaround, and buying the bonds offers a good way to bet on its success. The bonds offer yields over 8%, while the stock offers no dividend and has been trading between $2.50 and $5 since the financial crisis. In a world of low yields, Sprint bonds offer an exceptional fixed-income investment.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.