Interest rates may be up, but they’re still historically low. The best high-yield stocks are far better investments. Here are two that stand out.
The benchmark 10-year Treasury bond yield spiked 90% higher
in just the first three months of this year. That stratospheric leap took the
rate on the bellwether bond all the way to … 1.75%. And these higher rates are
filtering through the bond and fixed income markets.
Now, you can get about 0.75% on a two-year CD. The iShares
iBoxx Investment Grade Corporate Bond ETF (LQD) now yields a whopping 2.72%.
The yield on a AAA-rate 20-year municipal bond is all the way up to 1.5%. And
get this: Rates are likely to move even higher over the rest of the year.
Rates like this could keep you in beer money for a year if
you invest enough. Sure, after taxes and inflation you’ll probably lose money.
But that’s the brave new world. It looks like these pathetic low rates on
traditional fixed income investments are here to stay.
Fortunately, there are other places to find a decent yield
and income, even in this low-rate world—namely, in high-yield stocks. Yields on
certain income-paying securities are higher than they have been in a decade.
While the S&P 500 is near all-time highs, many income-paying stocks took a
beating during the pandemic and are still priced well below pre-pandemic
levels.
Solid companies have maintained their dividends through the
tumult. And yields are still sky high at these low prices. At the same time,
businesses are recovering strongly, and prospects are likely to greatly improve
as the vaccines unleash a full economic recovery.
You can still get safe and juicy yields in a low-yield world
if you know where to look. Here are two of the best high-yield stocks.
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