Kiplinger's May 2026 Letter Says Yields From 3% to 13% Are Available Right Now Despite Iran War Uncertainty

"We are seeing a massive spread, with opportunities ranging from stable 3% municipal bonds to 13% for those willing to get aggressive with business development companies. This is unfolding while the Federal Reserve holds the funds rate steady at 3.75% , even as the war in Iran throws a curveball at the market by hiking inflation expectations and long-term rates."

"The middle of the range is where the curve does most of the work. The 5-year Treasury yields 4.13%, the 10-year offers 4.47%, and the 30-year tops out at 5.02%. TIPS at the 10-year point pay a real yield of 2.00%, which is the inflation-adjusted version of the same trade. The 10Y-2Y spread of 0.48% is positive but compressed, at the 6th percentile over the past year."

"Blue-chip dividend equities sit alongside this band rather than above it. Johnson & Johnson ( NYSE:JNJ | JNJ Price Prediction) pays a yield of 2.26% on its $1.34 quarterly dividend, the 64th consecutive annual increase. Cardinal Health ( NYSE:CAH) yields about 1.1%. Both are dividend-growth names, and the income case rests on the compounding of the raise rather than the starting yield."

"Financial-services dividends layered on top of buybacks form the next step up. Morgan Stanley ( NYSE:MS) carries a $4.00 annual dividend for a yield near 2.1%, supported by a Q1 2026 ROTCE of 27.1% and $1.75 billion in Q1 buybacks. Charles Schwab ( NYSE:SCHW) lifted its quarterly payout 19% to $0.32 per share after Q1 2026 net income rose 30% on client assets of $11.77 trillion. The yield on Schwab is still modest at roughly 1.4%, but the dividend growth rate is the relevant figure for buyers focused on income five years out."

Yield opportunities span from stable municipal bonds near 3% to aggressive business development companies near 13%. The Federal Reserve keeps the funds rate steady at 3.75% while war-related shocks in Iran lift inflation expectations and long-term rates. Cash and short Treasuries anchor the low end, while the middle range is driven by the Treasury yield curve, with 5-year yields around 4.13%, 10-year yields around 4.47%, and 30-year yields around 5.02%. TIPS at the 10-year point offer a real yield near 2.00%. Dividend equities like Johnson & Johnson and dividend-growth names support income through compounding. Financial-services payouts combined with buybacks, such as Morgan Stanley and Charles Schwab, add another layer of yield and capital returns.

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