"Give muni bonds a good look." says Richard Moroney in Dow Theory Forecast, a leading "blue chip" newsletter that has been publishing for over five decades, who offers a trio of Vanguard funds for investors seeking safety and income.
The advisor explains, "Municipal bonds are showing signs of life, presenting investors with an intriguing opportunity." Here, he review the situation and offers some favorite investment vehicles.
"Muni bonds usually yield less than Treasurys because interest payments from municipals are exempt from federal income taxes.
"But in today's topsy turvy market, intermediate-term municipal bonds now yield around 3.7%, versus 3.6% for 10-year Treasurys. A tax-free yield of 3.7% is the equivalent of a taxable yield of 5.5%, assuming a 33% federal tax bracket.
"Uncertainties about the economy and credit concerns have weighed on bonds, lowering prices and raising yields. Hedge funds have also dumped muni bonds in an attempt to cover trading strategies gone sour.
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