Investors are still debating whether there's any juice left in the bull move that began in March of this year and that's tacked on more than 50% to the major market averages. Many believe we're due for a correction at this point. Others say there's still plenty of cash on the sidelines, and investors are more than a little timid to sink funds into equities at this stage.
IN PICTURES: 20 Tools For Building Up Your Portfolio

Handsome Yields
If you're an income investor, but want to participate in possible market upside, convertible securities may be your answer. Below we highlight a number of financials whose convertible securities pay a handsome current yield, but also move with the issuer's underlying common stock. Because they're convertible directly into common shares, they'll capture the gains in the stock, yet shouldn't fall as far because of the cushion provided by the yield.

Southern Fried Money
Regions Financial Corporation (NYSE:RF) is an Alabama-based retail and commercial bank and brokerage, with operations in 16 states across the South, Midwest and Texas. The company offers a convertible preferred (OTC:RFNCP) which is rated by Moody's Ba2 and by Standard & Poor's as BB+.

The convertible offers a dividend yield of 5.39% and has appreciated by nearly 100% in just over two months!

SLM Corp. (NYSE:SLM) may frighten off those who remember what happened to the company's in-laws, Fannie Mae and Freddie Mac, last year. SLM, or Sallie Mae as it's more commonly known, is a federally insured agency that originates, services and collects student loans. For those without fear, SLM offers a convertible preferred (OTC:SLMVP) with a 14.76% annual yield and Ba3 and BB- ratings from Moody's and S&P respectively.

Two Rocket Shot Convertibles
This convertible has been no slouch, either. From 52-week lows set in March of this year, Sallie Mae's convertible has climbed an outrageous 275% - what better testament to the upside potential in convertible securities.

Legg Mason Inc. (NYSE:LM) offers a 7% convertible (NYSE:LMI) with a Baa1 Moody's rating and a BBB- from S&P. The stock currently trades for roughly $35 and yields 10% annually. It's up just shy of 200% in the last year.

Legg Mason is a broker with offices worldwide and just over $650 billion under management.

The Wrap
Financials still look frightening to some, though they've done very well wrapped up in a bull market this year. And these convertibles have certainly earned their keep. If there's more snort left in this bull, the above three issues may be the safest way to play it. (To learn more, check out Introduction To Convertible Preferred Shares.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Will J.C. Penney Come Back in 2016? (JCP)

    J.C. Penney is without a doubt turning itself around, but that doesn't guarantee the stock will respond immediately.
  2. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  3. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  4. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  5. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  6. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  7. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  8. Stock Analysis

    Home Depot: Can its Shares Continue Climbing?

    Home Depot has outperformed the market by a wide margin in the last 12 months. Is this sustainable?
  9. Stock Analysis

    Yelp: Can it Regain its Losses in 2016? (YELP)

    Yelp investors have had reason to be happy recently. Will the good spirits last?
  10. Stock Analysis

    Is Walmart's Rally Sustainable? (WMT)

    Walmart is enjoying a short-term rally. Is it sustainable? Is Amazon still a better bet?
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center