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By Carolyn Bigda and George Mannes, Money Magazine

Dividend-paying stocks aren't the only places to seek a stream of income. Yields on beaten-down bond funds and REITs, for instance, are appealing now - and pros say the reward could be worth the risk. Here are your options, from safest to riskiest:

Investment-grade bonds. Outside of the financial sector, corporate America's balance sheets look strong, says Mark R. Brown of the financial advisory firm Brown & Tedstrom. And with high-quality bonds yielding more than double what long-term Treasuries are paying out, now is a great time to build a bond-based income portfolio, he says.

"Never have I seen it this good in 25 years." Of course, if the recession persists, even high-quality firms will expose you to greater credit risk. But you can reduce that by owning bonds through a diversified fund. Harbor Bond (HABDX), a Money 70 pick managed by fixed-income guru Bill Gross, is yielding 5.8%.

Muni bonds. These used to be of interest only to tax-conscious high-income investors. But with munis now yielding more than Treasury bonds - even before taxes - they deserve widespread consideration. True, the bad economy and big pension obligations could threaten local governments, but the power to tax provides a margin of safety. The yield on Vanguard Intermediate-Term Tax-Exempt (VWITX) was 4.25% in December - the equivalent of 5.9% after taxes if you're in the 28% bracket. Compare that with the 2.1% yield on 10-year Treasuries.

REITS. Real estate investment trusts have traditionally been a reliable source of retirement income. True, REIT dividends are taxed as ordinary income. Ugh. And this isn't exactly the safest time to bet on the health of real estate.

Still, REITs are yielding around four times what Treasuries are paying out. And if safety is your main concern, stick with a diversified Money 70 REIT fund, like Cohen & Steers Realty (CSRSX), yielding 4.2%, or Vanguard REIT Index (VGSIX), now paying out 9.4%.

High-yield bonds. It feels like the worst of all possible times to put money into junk bonds, where you face stock-like risks. But following last fall's demolition of the high-yield market, money managers are seeing real value here. Vanguard's High-Yield Corporate (VWEHX) is paying out 11%. Of course, if default rates go unimaginably high, it could be real trouble.

Have you lost 40% or more of your net worth in the market? We may be able to help. Tell us how much you lost, what you have left, and what you're invested in, at makeover@moneymail.com. Include name, age, city, state and a recent photo.  To top of page

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