If you’ve spent the past few months watching the Trump tariff drama unfold, AI stocks become volatile and listening to everyone from your broker to your barista talk about rate cuts and inflation, you might think the only path to investment success in 2025 runs through stocks.
But quietly, away from the hype, a growing number of individual investors are making a different move: they’re locking in perhaps 5–6% yields from something that doesn’t flash on your phone every minute or swing 4% a day.
They’re buying corporate bonds.
No, they’re not glamorous; and no, they won’t double in price overnight. But for investors looking for steady income, less stress, and real returns above inflation, corporate bonds are increasingly hard to ignore.
Today, the yield on a high-quality (Aaa-rated) corporate bond is around 5.67%, according to Moody’s data as of May 22. Even Baa-rated investment-grade bonds are yielding over 6.1%. By comparison, the 10-year US Treasury yield is hovering around 4.5%. And many dividend stocks still yield less than 2%.
So, if you can get 5–6% from the bonds of companies like Johnson & Johnson or Procter & Gamble—businesses that have weathered wars, pandemics, and recessions—that starts to look like a pretty solid deal.
The backdrop matters. The Federal Reserve has so far held rates steady in the 5.00% range through 2025, and while markets earlier priced in cuts by July, that timeline has been pushed back.
Fed officials, including Governor Lisa Cook and Vice Chair Philip Jefferson, have recently emphasized the need for “greater confidence” that inflation is under control before easing policy—making a July cut unlikely.
Meanwhile, inflation is easing but still sticky. The Consumer Price Index rose 2.3% year-on-year in April, while core inflation remains higher at 2.8%, still above the Fed’s 2% target. Growth has also cooled: US GDP contracted by 0.3% in Q1, marking the economy’s first negative print since 2022.
At the same time, the fiscal picture is worsening. The White House’s FY2025 budget request includes $849.8 billion for defence spending alone, while the broader discretionary budget proposes multi-year infrastructure investments that push total federal obligations sharply higher. According to the Congressional Budget Office, US federal debt held by the public is projected to reach 116% of GDP by 2034—and independent forecasts suggest it could exceed 130% within the decade if current spending trends persist.
That raises an uncomfortable but increasingly relevant question: could high-quality corporate bonds be more reliable than government debt?
It’s not as far-fetched as it sounds. Over the past few years, corporate America has quietly cleaned up its balance sheet. Many companies refinanced at low rates during the pandemic, extended maturities, and built cash reserves. According to S&P Global, less than 7% of high-yield US corporate debt matures before 2027, offering insulation against short-term refinancing pressure.
Let’s not forget what we’ve seen this year. In April, markets briefly wobbled after the Iran–Israel drone exchange. Then came renewed tension in the Taiwan Strait. Oil prices jumped. Equities dipped. But investment-grade bond spreads barely moved.
This kind of resilience matters, especially for individual investors who want a portfolio that can absorb shocks.
Of course, bonds come with trade-offs. Prices can dip when rates rise, and lower-rated bonds carry more risk. But with rate cuts now a matter of when, not if, the direction of travel for bond prices in 2025 likely tilts upwards, offering potential capital gains on top of attractive yields.
More importantly, corporate bonds pay you to wait. They deliver consistent income in a market where growth expectations are getting murkier and stock valuations are starting to look stretched. For investors nearing retirement, or those just tired of chasing performance, that kind of predictability is worth more than ever.
Nigel Green is deVere CEO and Founder
Also published on Medium.
