Investing in bonds feels like swimming against a powerful tide these days. Yields have risen sharply since Election Day, pushing bond prices down. The dynamic has made it tough to earn a positive return in high-grade bonds, which may suffer additional price declines.

The problem is that a long era of ultralow interest rates appears to have ended. The Federal Reserve has started raising short-term rates, and it is winding down its program of buying government bonds to help prop up prices (and keep yields down). Donald Trump’s election as president, meanwhile, has revived the prospect of stronger economic growth and inflation, which would erode the value of bonds and their fixed-income payments. Already, the yield of the benchmark 10-year Treasury note has climbed from 1.8% before Election Day to 2.4% today, a huge spike in a brief span. Kiplinger forecasts that 10-year Treasury yields will be at 3% by year-end. That almost certainly means more pain ahead for holders of high-quality bonds. “We’re concerned that rates will continue to rise and returns on bonds will be low to negative,” says Laird Landmann, codirector of fixed income at TCW, which runs TCW and Met West bond funds.

Higher yields do grant one big benefit: They put more cash in your pocket from interest income. If you own short-term debt, the bonds’ prices shouldn’t fall much if rates rise modestly. And you can reinvest cash proceeds from bonds maturing in a year or two, pocketing higher market rates relatively soon. But it could take many years to recoup losses in long-term bonds if rates keep ascending. For example, if long-term interest rates were to rise by one percentage point, the price of a 30-year Treasury bond would likely decline by 20%, wiping out more than six years’ worth of interest payments.

So how do you invest for income in this climate? Limit your risk of losses from higher rates and spread your bets. Corporate bonds and mortgage-backed securities yield more than Treasuries and are less sensitive to rate swings, for instance. Also appealing are some high-yielding stocks, such as real estate investment trusts and energy pipeline firms, as well as closed-end funds, many of which yield upward of 7%. Of course, several of these investments come with an elevated risk of a credit-rating downgrade or default. But layering them atop a foundation of high-quality bonds and cash can help steady your portfolio if markets head south.
Here are 29 income ideas to scoop up yields from 1% to 10%. All prices, yields and related data are as of March 31.

Municipal Bonds: 1%-5%
Issued by state and local governments, municipal bonds yield an average of just 2.5%. But you won’t owe a penny in federal tax on most types of muni-bond income, and you can get a break on state taxes, too, if you invest in munis issued in the state where you reside. For instance, if you live in a state with a stiff income tax, such as California, and are in the top combined federal and state bracket of 50.9%, a tax-free yield of 2.5% would be equivalent to a 5.1% yield from a taxable bond—close to the yield of many low-quality corporate bonds.

Granted, the muni market has experienced some turmoil lately because of concerns that Congress will cut federal income tax rates, eroding the value of the tax-exempt status of muni interest. But changes in tax rates have historically had minimal impact on muni prices, says Christopher Ryon, a bond fund manager with Thornburg Investment Management. “It’s a red herring,” he says. “Tax changes are going to take a long time to work through the legislative process, and I don’t think they’ll be a major driver of the muni market.”
Risks to your money. Munis could slide if states or local governments run into financial trouble (for instance, some bonds issued by Illinois, a state that has long outspent its revenues, trade at 87 cents on the dollar). Muni bonds can be sensitive to changes in interest rates, especially if they mature far in the future—say, 15 or 20 years from now. Many muni funds hold loads of long-term bonds, which could prove disastrous if rates keep rising. Consider, for example, Nuveen All-American Municipal Bond Fund (symbol FACCX). Its share price would likely drop by more than 8% if long-term rates were to increase by one percentage point.

How to invest. To maximize tax savings, find a muni mutual fund that will trim both federal and state taxes. For now, it’s prudent to stick with short- or intermediate-term funds, forgoing some income in exchange for a buffer against rising rates. A good choice for Californians is Fidelity California Limited Term Tax-Free (FCSTX, yield 1.1%). For New Yorkers, USAA New York Bond (USNYX, 2.0%) looks like a solid bet. Neither fund takes excessive interest-rate risk, keeping its duration (a measure of sensitivity to rates) relatively low. In the national muni-bond realm, we like Fidelity Municipal Income 2019 (FMCFX, 1.1%), which will liquidate shortly after June 30, 2019. Its average duration is 2.1 years, suggesting that its price would decline by roughly 2% if rates were to rise by one percentage point.

Aiming for higher returns? Take a flier on SPDR Nuveen S&P High Yield Municipal Bond ETF (HYMB, price $57, 4.7%), an exchange-traded fund that holds bonds issued by municipalities with below-average credit ratings. On a taxable-equivalent basis, the fund yields 8.3% for investors in the top federal tax bracket of 43.4% (which includes a 3.8% surcharge on investment income). That’s on par with the average yield of taxable “junk” bonds, which are generally riskier than muni bonds. The fund’s duration of 7.8 years looks high, but the steep after-tax yields of bonds in the portfolio should help cushion against losses due to rising rates. The fund’s holdings could also slide if issuers default on their obligations or are downgraded by credit-rating agencies.

Investment-Grade Bonds: 2%-4%
Yields on high-quality corporate bonds look much more appealing than they did a year ago. The Bloomberg Barclays U.S. Aggregate Bond index—a proxy for the high-quality bond market—yields 2.6%, well above its 52-week low of 1.8%. Also attractive these days are mortgage-backed securities—pools of commercial real estate loans or residential mortgages.

Risks to your money. The bonds’ safety net is their dependable coupons, or annual interest rates. But yields are low today, so those payments “don’t give you as much protection” as they once did, says William Kohli, chief investment officer for fixed income at Putnam Investments. A weakening economy and credit-rating downgrades could also depress bond prices.

How to invest. Avoid long-term bonds and emphasize funds with the flexibility to invest in wide swaths of the market. Metropolitan West Unconstrained Bond (MWCRX, 2.3%) holds corporate bonds, Treasuries and mortgage securities. With an average duration of 1.5 years, the fund keeps its rate sensitivity low.
DoubleLine Total Return Bond (DLTNX, 3.4%), a member of the Kiplinger 25, the list of our favorite no-load mutual funds, focuses on residential mortgage securities, a specialty of comanager Jeffrey Gundlach. A duration of four years makes the fund somewhat sensitive to rates. But with a yield north of 3%, the fund’s income should keep returns in positive territory.

Pimco Income Fund (PONDX, 3.5%), another Kip 25 member, holds corporate and government bonds, mortgages and some riskier bonds, such as emerging-markets debt. Income is a bit more vulnerable to ratings downgrades than the typical high-grade bond fund. And it has a moderate average duration of 3.6 years. Long term, it has proved “adept at handling both challenges and opportunities,” says Morningstar.

Real-Estate Investment Trusts: 4%-6%
With real estate recovering from the Great Recession, property-owning REITs have enjoyed healthy gains. Returns (including dividends) have averaged 10% over the past five years. Yet REITs, which own and manage real estate such as apartments, malls and offices, still look compelling.

The stocks trade at 92% of their underlying property values—below the long-term average of 100%, according to Bank of America Merrill Lynch. Yields average 4.0%, about double that of Standard & Poor’s 500-stock index. REITs should gradually boost their distributions as they increase rents and buy or develop additional properties.
Risks to your money. Many REITs borrow heavily to finance their business and could be hurt by higher rates. A downturn in real estate values would also likely hurt REIT shares. Some firms face specific industry pressures. Health care REITs, for instance, could be hurt by cutbacks in reimbursements by Medicare for patients in senior housing or nursing facilities.

How to invest. Schwab U.S. REIT (SCHH, $41, 3.7%), a member of the Kiplinger ETF 20, holds a basket of 106 REITs spanning the property spectrum. Annual fees of 0.07% undercut every other REIT ETF on the market.
Mall owner Simon Property Group (SPG, $172, 4.1%), the largest publicly traded U.S. REIT, has been hurt by concerns that online shopping is killing many retailing tenants. But Simon is focusing on more-profitable upscale malls that should benefit from closures of lower-quality shopping centers. Simon hiked its dividend by 9.4% in 2017 and should keep raising its payout as it adds more properties.

Hospitality Properties Trust (HPT, $32, 6.3%) leases space to hotel operators such as Hyatt and Marriott, collecting a cut of nightly room rates at more than 300 properties. Hotel revenues can bounce around with tourism and business-travel trends. But the firm also owns 198 travel centers—places where truckers stop to eat, rest and fuel up their rigs. Growth at Hospitality’s two businesses should enable the company to raise its dividend modestly in the years ahead.

For dividends every month, consider Realty Income (O, $60, 4.2%). It owns more than 4,900 properties, leasing space to retail giants such as Walgreens and Walmart. Most tenants pay for maintenance, taxes and insurance, leaving Realty to just collect rents. Its diverse array of tenants is less susceptible than mall owners to the growth of online shopping. The business is so steady that Realty has paid dividends for more than 560 consecutive months.

High-Yield Bonds and Bank Loans: 3%-5%
Because high-yield, or junk, bonds are issued by firms with below-average credit ratings, they carry above-average risk. But junk bonds can be particularly lucrative in an expanding economy (which is currently the case).

Junk bonds now yield 5.9%, on average, compared with 2.6% for investment-grade debt. Despite some defaults and ratings downgrades in the energy and mining industries, default rates for junk bonds remain low overall, and they shouldn’t increase substantially without a recession, says Marty Fridson, chief investment officer of Lehmann Livian Fridson Advisors. With the economy expanding at a 2% annual pace, he adds, investors can “reasonably expect” a return of at least 5% in the coming year from junk bonds.
Another good option these days is a close cousin of junk bonds: floating-rate bank loans. Companies with low credit ratings take out these loans to finance a merger or fund their business operations. The loans don’t yield much at face value. But their coupons adjust with short-term market rates, making them a good bet to pay out more if rates keep rising.

Risks to your money. A downturn in the economy would push up default rates, which would ripple through the junk-bond market, pressuring prices. Another potential drawback is that junk bonds tend to trade infrequently; if investors rush for the exits, the market could freeze up, forcing fund managers to sell at fire-sale prices.

How to invest. VanEck Vectors Fallen Angel High Yield Bond ETF (ANGL, $30, 5.0%) holds IOUs originally issued with investment-grade ratings but subsequently downgraded to junk status. If issuers of these “fallen angels” can recoup their investment-grade status, which happens on occasion, the bonds should rally, supplementing the fund’s interest income.

Another ETF we like is SPDR Bloomberg Barclays Short Term High Yield Bond (SJNK, $28, 5.4%). The fund homes in on junk bonds maturing within two to three years, off-loading most interest-rate risk. With a yield above 5%, the fund possesses a decent cushion against falling bond prices.

Kip 25-member Vanguard High-Yield Corporate (VWEHX, 5.1%) focuses on relatively high-quality junk. The quality tilt may hold back returns when the junk market soars, as it did in 2009 and 2010. But the strategy helps the fund stay ahead of the pack when the junk-bond market gets rocky. Annual expenses are just 0.23%.
Among bank-loan funds, Fidelity Floating Rate High Income (FFRHX, 3.0%) emphasizes firms with relatively strong underlying businesses. The fund doesn’t yield as much as many of its rivals, but it also takes on less risk. For a higher yield, consider Loomis Sayles Senior Floating Rate and Fixed Income A (LSFAX, 4.5%), which delves into riskier loans.

Foreign Bonds: 3%-6%
Interest rates may be on the upswing in the U.S., but central banks in other parts of the world are still trying to keep them down. That can make foreign bonds a better bet over the next year. Although yields in Europe and Japan aren’t enticing, fund managers are finding opportunities in select foreign markets. In the developing world, yields top 5%. Moreover, many foreign firms and governments issue dollar-denominated debt, mitigating the impact of currency swings on the bonds’ prices.
Risks to your money. Foreign bonds could slump if overseas economies weaken. A sharp rise in the dollar could pressure bonds that are denominated in foreign currencies (when the greenback strengthens, investments in foreign currencies translate into fewer dollars). Emerging-markets bonds are particularly vulnerable to abrupt reversals in investor sentiment.

How to invest. Conservative investors should give T. Rowe Price Global Multi-Sector Bond (PRSNX, 3.4%) a try. The fund keeps about one-third of its assets in U.S.-based debt, which steadies the portfolio, and most of the fund’s holdings consist of high-quality government and corporate bonds. Also in the mix is a 9% stake in floating-rate bank loans, which should fare well if short-term U.S. rates increase.
Spice up your portfolio with Fidelity New Markets Income (FNMIX, 5.9%), a member of the Kiplinger 25. The fund emphasizes bonds issued by governments in Latin America, eastern Europe and the Middle East—parts of the world where yields (and risks) are considerably higher than in the U.S. and western Europe. However, longtime manager John Carlson keeps more than 90% of the fund in dollar-based debt, which should help minimize losses if the dollar climbs sharply.

Another good choice for developing-world bonds is TCW Emerging Markets Income (TGINX, 5.3%). The fund invests in both local-currency bonds and dollar-based debt. Lead managers Penny Foley and David Robbins have racked up a strong record, performing well “in a variety of market conditions,” says Morningstar analyst Karin Anderson. In 2015, when the typical emerging-markets bond fund lost 6.0%, TCW declined by just 2.8%.
Master Limited Partnerships: 6%-8%

Pipeline companies pump profits from moving America’s rising oil production.
With domestic oil production rising to about 9 million barrels per day—up from 8.4 million in mid 2016—MLPs are thriving once again. The firms operate pipelines, storage terminals and other types of infrastructure for the oil-and-gas industry. MLPs distribute most of their cash flow, after expenses, and as they build more pipes to meet demand, they should be able to increase distributions. “We’re back in an environment in which the industry will grow,” says Chris Eades, who manages funds that buy MLPs for ClearBridge Investments.
Risks to your money. The stocks could slide if oil prices tumble and producers scale back on drilling (reducing demand for pipes, storage and processing plants). Steeper financing costs for new projects could hurt the business. If you buy individual MLPs, you’ll have to deal with complex K-1 tax forms.
How to invest. Among individual stocks, Eades recommends three firms: Nustar Energy (NS, $52, 8.4%), Enable Midstream Partners (ENBL, $17, 7.6%) and Enterprise Products Partners (EPD, $28, 6.0%). The first two MLPs should benefit from rising oil production in the shale regions of Texas and Oklahoma, Eades says. Enterprise is one of the largest and most diversified MLPs, with a solid balance sheet and projects in the works that should lead to steadily higher distributions. “If you want to own one MLP stock, this is it,” says Eades. If you’d rather not pick your own securities, take a look at Alerian MLP ETF (AMLP, $13, 6.3%). It recently held 25 stocks, emphasizing the biggest MLPs. Investors in the ETF receive standard 1099 tax forms rather than K-1s. One drawback, however: The ETF doesn’t yield as much as many individual MLPs, in part because of relatively high annual fees of 0.85%.

Closed-End Funds: 7%-9%
Like their ETF cousins, closed-end funds (CEFs) hold baskets of securities. And like ETFs, CEFs trade like stocks. But whereas ETFs contain mechanisms designed to keep their share prices close to the value of their underlying assets, closed-ends do not. As a result, CEF shares typically trade well below (and sometimes well above) the underlying net asset value of their holdings. Most CEFs also borrow money to buy securities.
Ideally, you should decide whether you like a CEF’s underlying investments and buy when the fund trades well below its NAV, says John Cole Scott, chief investment officer of Closed-End Fund Advisors, which specializes in CEFs.
Risks to your money. A fund’s investments could slump. The discount between a fund’s NAV and share price may widen. CEFs’ use of borrowed money, or leverage, also boosts risk. Steeper short-term rates could hurt heavily leveraged funds by raising their interest expenses and squeezing their distributions.
How to invest. We like Pimco Dynamic Credit and Mortgage Income Fund (PCI, $21, 9.2%), which keeps about two-thirds of its assets in “non-agency” mortgage securities and rounds out the portfolio with junk bonds and other kinds of debt. Non-agency securities—pools of residential mortgages that aren’t backed by government entities such as Fannie Mae—have lower credit ratings than government-guaranteed mortgage securities, but they yield more and aren’t as sensitive to rate moves. Two caveats: The fund uses a hefty amount of leverage, amounting to 46% of assets, and it trades at just 2% below NAV. “We trust Pimco with this fund,” says Scott.
Ares Dynamic Credit Allocation (ARDC, $16, 7.7%) holds about half of its assets in floating-rate loans, with the rest in junk bonds and other kinds of debt. It looks risky from a credit perspective, but the portfolio should hold up well in an expanding economy. The fund’s floating-rate loans, meanwhile, would gain value if short-term rates were to increase, making the fund a good bet now, says Scott. The shares currently trade at an 10% discount to NAV.

BlackRock Enhanced Equity Dividend (BDJ, $9, 6.6%) holds big dividend-paying stocks and sells call options against half of its portfolio to generate additional income. That strategy effectively caps the fund’s appreciation potential in a rising market, but income from the options should help mitigate losses in a downturn. In 2008, for instance, the fund declined by 17.2%—less than half the loss sustained by the S&P 500. The shares trade at a 9% discount to NAV.

Mortgage REITs: 8%-11%
Interest rates average about 4.1% for a 30-year home loan. But mortgage REITs, which invest primarily in pools of residential mortgages, have found ways to yield much more. The firms use some of their own cash to buy mortgage-backed securities. They also load up on short-term debt to buy assets, and many boost their payouts with other types of real estate loans or direct lending to property owners.
All this may sound like a house of cards. But the business does feature an important safeguard: Most big mortgage REITs stick mainly with securities issued by government-sponsored firms, such as Fannie Mae. That effectively eliminates credit risk.

Risks to your money. The main threat to mortgage REITs is if short-term rates rise without a corresponding bump in long-term rates, squeezing their income (and dividends). The gap between short-term and long-term rates has narrowed recently. The Fed has raised short-term rates twice, while long-term rates, which are set in the bond market, have eased. Yet mortgage REITs have held steady—returning an average of 10.8% in the first quarter of 2017—partly because the firms have maintained their payouts. Jeffrey Gundlach, CEO of DoubleLine Capital Management, sees a tougher rate climate for mortgage REITs this year. But he advises holding the stocks. “Investors should not expect price gains, but the dividends alone should lead to decent returns this year,” he says.

How to invest. Annaly Capital Management (NLY, $11, 11.0%), the largest mortgage REIT, with $87.9 billion in assets, invests primarily in government-backed mortgage securities. Income from those investments could dwindle if the gap between short- and long-term rates shrinks. But Annaly has been expanding into adjustable-rate mortgages, which would do better than fixed-rate loans if rates were to rise. It has also been adding commercial real estate loans and other types of loans to its portfolio, investments that may help Annaly maintain its payouts.

Blackstone Mortgage Trust (BXMT, $31, 8.0%) isn’t a traditional mortgage REIT. Affiliated with Blackstone Group, a large commercial property owner, the firm makes loans to developers and real estate owners in North America and Europe. Nearly 90% of its portfolio consists of floating-rate loans that will yield more as short-term rates climb. Furthermore, Blackstone’s portfolio of loans is expanding, and the firm possesses plenty of financial firepower to buy more assets and hike its dividends, says Credit Suisse, which rates the stock “outperform.”

The best bet for fund investors is iShares Mortgage Real Estate Capped ETF (REM, $45, 9.5%), which recently owned 34 stocks, with a tilt toward the biggest firms. The fund holds some cash and shares of other real estate firms that don’t pay as much as those that primarily invest in mortgages. The ETF, which charges 0.48% annually in fees, returned 9.0% annualized over the past five years.