The Federal Reserve cut interest rates by 25 basis points (0.25%) on December 20, 2025, marking the third reduction of the year. This move aims to stimulate borrowing and investment amid an uncertain economic landscape. While 10-year Treasury yields remain high, other sectors like real estate and dividend stocks may present favorable investment opportunities in the changing interest rate environment.
The Vanguard High Dividend Yield Index Fund (NYSEARCA: VYM) offers an attractive dividend yield of 2.43%, making it appealing for passive income investors. The fund has returned nearly 17% year-to-date (YTD), outperforming the S&P 500. Additionally, the Vanguard Real Estate ETF (NYSEARCA: VNQ) boasts a dividend yield of 3.94% and focuses on a diversified portfolio of over 150 real estate companies, benefiting from lower borrowing costs. Meanwhile, the Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ: VCIT) provides a yield of 4.58% with a YTD return of about 9%, catering to those seeking income through corporate bonds.
