With 2025 already off to a volatile start, investors may want to look for steady investments that can earn solid income. On Monday, markets were rocked after President Donald Trump over the weekend slapped 25% tariffs on goods from Canada and Mexico, and a 10% duty on imports from China, effective Tuesday. After initially tanking in morning trading, stocks reversed course after Trump said he would suspend the duties on Mexico for one month. The initial sell-off encouraged investors to snap up Treasurys. The 10-year yield slipped to 4.543%. But the 2-year yield moved up fractionally to 4.263%. Bond prices move inversely to yields. There is also concern about upward pressure on inflation and slower economic growth due to the tariffs. “Initially, Treasury yields are likely to rise as tariffs raise inflation,” the fixed income team at the Schwab Center for Financial Research said in an email Monday. “As a result of the inflation impact, the Fed would not be able to cut interest rates any time soon — probably until sometime next year, if then. The Treasury yield curve would likely shift upward.” There are several areas investors can turn to if volatility rears its head this year. Solid yields in cash Attractive yields can still be found in cash instruments, such as money market funds and certificates of deposit . Their yields follow the moves of the Federal Reserve , whose path forward on rates is uncertain. The central bank held rates steady in January. The Crane 100 Money Fund Index , which is based on the largest taxable money funds, has a current annualized seven-day yield of 4.19%. The funds hold extremely short-term debt. To lock in solid yields for a little longer, investors can consider one-year certificates of deposit. However, they’ll face the potential of reinvestment risk if yields are lower once the CD matures. In addition, they may be subject to penalties if they try to access the money before maturity. Here are some current one-year CD rates. Ladder your way to stability Another way to benefit from today’s higher rates is to consider laddering short-term Treasurys or CDs. Michael Carbone, a certified financial planner at Eppolito Carbone & Co. in Chelmsford, Mass., likes laddering brokered CDs, as investors can shop around and may find competitive yields. “During normal times, I encourage people, especially retirees, to carve out a portion of their bond portfolio and build a bond ladder using short-term Treasurys, or brokered bank CDs,” he said. Laddering involves purchasing multiple CDs or Treasurys with different maturity dates. As they mature, investors get some liquidity and they can reinvest the proceeds. Carbone prefers ladders that range from one to five years or one to seven years. Shorter ladders, say using 9-, 12- and 18-month instruments, can help investors nab attractive rates if they’re saving for near-term goals. Treasury bills are also solid candidates for laddering, and they give investors an added element of safety. The money is backed by the full faith and credit of the U.S. government, which goes beyond the Federal Deposit Insurance Corp’s coverage of up to $250,000 per depositor and per insured bank. Also, Treasury bill income is subject to federal income taxes, but exempt from state and local levies. CDs, however, spin off interest that’s taxed as ordinary income at the state and federal levels. Dividend stocks Dividend-paying stocks are also seen as a hedge against market volatility. “Dividend-paying stocks in general tend to be less sensitive to interest rates because you are getting more of your return in the form of dividends,” explained Rafia Hasan, CFP and chief investment officer at Perigon Wealth Management in San Francisco. Dividend aristocrats could be a possible investment opportunity right now, said Kevin Simpson, founder and chief investment officer of Capital Wealth Planning in Naples, Fla. They are companies that have increased their dividends every year over the past 25 years. However, not every name may be a good investment, so investors should do their homework, he said. NOBL 1Y mountain ProShares S & P 500 Dividend Aristocrats ETF BMO Capital recently highlighted a dividend growth strategy as a way to protect portfolios during times of turbulence. The stocks can also boost portfolio performance, the firm’s chief investment strategist Brian Belski said in a note last month. BMO’s strategy focuses on stocks that combine growth and yield attributes, because the companies tend to have a history of consistent earnings and cash flow, he said. These characteristics are typically rewarded by investors over a longer period of time, he noted. Names in the strategy include Cincinnati Financial , Domino’s Pizza and Marathon Petroleum . Still, investors should be careful about the industries they invest in, warned Perigon’s Hasan. Dividend stocks tend to be more value-type plays, she said. “Think about what industries are going to be vulnerable to some of these tariffs,” she said. “Some of your industrial-type companies fall into that value spectrum.” Options strategies Capital Wealth Planning’s Simpson favors an out-of-the-money covered-call strategy right now. Investors can sell call options on a stock they own at a price above where shares currently stand. They may see their upside capped if they sell the stock at the contracted price and the stock rallies further. But they also generate income from the options premium — as well as collect any potential dividends for the period of time they hold the stock, Simpson said. “Covered calls tend to generally work best when we need them most,” he said. “The option pricing model increases the premium as volatility increases.” In fact, his firm has been much more active in covered-call writing so far in 2025 that it was all of last year, he said. “The volatility is something that we have leaned into in a big way since the turn of the calendar,” Simpson said.
