Western Asset Premier Bond Fund (WEA) Stock

Western Asset Premier Bond Fund (WEA) is a closed-end fund providing investors exposure to a portfolio that is tilted toward higher quality fixed-income investments. The fund pays a 7.61% distribution yield, with coverage potentially set to improve as the Fed cuts rates and its borrowing costs can come down. We take an updated look today at WEA and compare it with VBF, a non-leveraged CEF that also tilts with a heavier weighting toward investment-grade debt investments.

The Western Asset Premier Bond Fund offers a 7.50% yield, but its after-tax real yield is less appealing, especially for high-tax-bracket investors. Despite a share price decline of 18.90% over five years, the WEA fund's high yield has resulted in better total returns compared to the index. Current market conditions and Federal Reserve rate expectations limit the fund's potential for capital gains, making it purely an income play right now.

Western Asset Premier Bond Fund has seen some strong performance since our prior update. The fund offers an attractive distribution yield with exposure to primarily investment-grade bonds but also some high-yield exposure. WEA's performance could be solid going forward, but the rather narrow discount makes it less appealing at this time.

The Western Asset Premier Bond Fund is a closed-end fund that invests in a mix of investment-grade and high-yield bonds. The fund has a 5.6-year duration and is well-positioned to benefit from a decline in interest rates. WEA has a 7.9% yield and is currently trading at a 3% discount to NAV.