Corporate bonds and government-agency and mortgage-backed securities can all deliver more income than Treasuries. The additional yield embedded in these investment-grade bonds should also help them retain more of their value if interest rates do eventually climb.
Earnings for All
- Bank Accounts: 1%-4%
- Municipal Bonds: 1%-3%
- Real-Estate Investment Trusts: 2%-6%
- Foreign Bonds: 3%-6%
- Preferred Stocks: 4%-7%
- Closed-End Funds: 5%-11%
- High-Yield Bonds: 6%-8%
- Master Limited Partnerships: 5%-11%
Risks to your money. Higher rates would depress prices of existing bonds. Other pitfalls include credit-rating downgrades or signs that corporate balance sheets are coming under pressure.
Hire a pro. Fidelity Corporate Bond (FCBFX, 3.8%) focuses on high-quality, intermediate-term bonds to pump out a robust stream of income. Pimco Income Fund (PONDX, 3.4%), a member of the Kiplinger 25, includes a broad mix of bonds, including corporate IOUs, mortgage-backed securities and some junk issues. Moreover, its bonds mature in an average of six years, limiting interest-rate risk. Vanguard Intermediate-Term Investment-Grade (VFICX, 2.6%) invests mainly in high-caliber bonds at the shorter end of the maturity spectrum—qualities that should help the fund hold up if the bond market takes a tumble. For a pure play on corporate bonds, consider exchange-traded iShares Core U.S. Credit Bond ETF (CRED, $110, 3.2%). (All prices and returns are as of March 31.)
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Do it yourself. Individual IOUs can be a good way to pocket reliable income that won’t fluctuate over the lifetime of the bonds (unlike a fund, whose yield can bob around). Bonds issued by chip maker Qualcomm look attractive, says Scott Kimball, comanager of the BMO TCH Core Plus Bond Fund. The tech firm’s bonds maturing in 2025 yield 2.9% and earn an A rating for quality. Also compelling are bonds from drugmaker Abbvie, rated single-A and yielding 4.2% to their 2035 maturity. In the financial sector, Kimball likes bonds issued by financial giant Citigroup, rated triple-B and yielding 4.3% until they come due in 2026. None of the bonds is callable before the maturity date, he adds, making all of them solid choices for steady income.
Next: REITs to Earn 2% - 6%
-
Designing Your 'Immortal' Financial PlanExplore an approach that offers solutions for those navigating the intersection of longevity, fulfillment and financial security.
-
How to Protect Your Privacy While Using AIHow to keep your information and finances safe while using AI, including ChatGPT and Perplexity.
-
Dividends Are in a RutDividends may be going through a rough patch, but income investors should exercise patience.
-
Bond Ratings and What They Meaninvesting Bond ratings measure the creditworthiness of your bond issuer. Understanding bond ratings can help you limit your risk and maximize your yield.
-
Bond Basics: Treasuriesinvesting Understand the different types of U.S. treasuries and how they work.
-
Bond Basics: Ownershipinvesting Bonds come in a variety of forms, but they all share these basic traits.
-
Bond Basics: Pick Your Type
investing Bonds offer a variety of ways to grow wealth and fortify your portfolio. Learn about the types of bonds and how they work.
-
Municipal Bonds Stand FirmIf you have the cash to invest, municipal bonds are a worthy alternative to CDs or Treasuries – even as they stare down credit-market Armageddon.
-
Best Banks for High-Net-Worth Clientswealth management These banks welcome customers who keep high balances in deposit and investment accounts, showering them with fee breaks and access to financial-planning services.
-
High Yields From High-Rate LendersInvestors seeking out high yields can find them in high-rate lenders, non-bank lenders and a few financial REITs.
