Bonds remain attractive in 2025 with the yield on the 10-year treasury running in the low-to-mid 4% range. However, as slow as the pace may be, the FOMC is on track to begin reducing interest rates this year and bring them back to a “normalized” level over time. That means a decline of approximately 2%, which is about half the current base rate, suggesting a similar decline in bond yields.
The obvious workaround is high-yield stocks, and there have been few times as good as mid-2025 to buy them. Names like Verizon (NYSE: VZ), Stanley Black & Decker (NYSE: SWK), The J.M. Smucker Company (NYSE: SJM), and PepsiCo (NASDAQ: PEP) are trading near historically low valuations, paying at least 4% (if not significantly more), and have a tailwind to support share price rebounds that have already begun. Their yields will remain steady over the coming years, and they are expected to grow while their share prices increase.
