Tax-free and ready For Boarding
Big U.S. airlines are in their best fnancial shape in years. Earnings are strong, the number of passengers is up, luggage fees aren’t going away and fuel prices are down.
For high-net-worth investors not interested in the volatility or potential capital loss that can come from owning dividend stocks, tax-free airport revenue bonds are a great bet.
Major airports all over the U.S. are redefning their businesses. Time was, fying from Hong Kong to LAX was like going from the Jetsons to the Flintstones. No more. The nation’s large airports are remodeling, expanding and modernizing. Nowadays a trip to an airport like Atlanta’s or San Francisco’s is like going to a high-end shopping mall.
U.S. airports sparkle with star-quality shops like Coach, Brooks Brothers, Hermès and Gucci. Their high-end restaurants serve sushi, farmfresh foods and those $12.95 tuna sandwiches to take onboard. These improvements are not only aesthetically appealing—they’re proftable, too.
That is why municipal bonds backed by airport revenues, rather than general obligation bonds, are the way to go—think of Detroit and the pitiful 41 cents on the dollar that some GO bondholders recovered. Revenue bonds are less politically tainted and burdened. They’re also Standard & Poor’s and yield 2.10% to the call and 2.29% to maturity. For those in the highest tax bracket, that’s a TEY of 3.48% to the call and 3.80% to maturity.