Sorry, Grandma. You're getting shafted by Uncle Sam.

If you save your money in certificates of deposit or short-term bonds, you'll earn next to nothing. And you'll lose purchasing power each year as inflation eats away at your money.

If you try to earn a little more by owning long-term bonds, or higher-yield ones, you'll be putting yourself at risk. Both those types of bonds involve risk. Long-term bonds can get hit badly by inflation. High-yield bonds are typically issued by companies with weaker finances. They are vulnerable in a downturn.

What can you do?

Uncle Sam, effectively, is telling you to invest in the stock market.

It's grossly unfair, especially at a time in your life when you probably don't want to do any such thing. But we have to play the hands we are dealt rather than the ones we want.

I've been scanning the ranks of blue-chip stocks, and here is some good news: There are plenty of sound, solid, large-cap companies out there that now pay you more -- often much more -- than Treasury bonds.

Yes, these are stocks, not cash or bonds. They can go down as well as up.

But these are top-quality blue-chip stocks with high profit levels. If you hold a basket of them, your overall risks aren't that high. Any volatility is likely to be short term.

And on the positive side, most stock dividend income, unlike bond income, is taxed lightly, at special rates: 5% or 15%.

Looking down the list, one remarkable name leaps out: Microsoft (MSFT, news). Yes, Mr. Softy now has a higher yield than Uncle Sam. Microsoft's dividends now yield 2.4%, compared with the mere 2% you'll earn on 10-year U.S. Treasury Note (TC10Y). (Microsoft owns and publishes MSN Money.)

It's a sign of how low Treasury yields are today -- and how far Microsoft has fallen since the days when it was Wall Street's favorite growth stock. The company has fared badly in the past decade under the leadership of Bill Gates' successor, Steve Ballmer. How he remains in his job is one of Wall Street's enduring mysteries.

But from the point of view of a value investor, someone who just wants income rather than growth, that's a bit of a moot point. Microsoft remains highly profitable in its core businesses. Its $5.2 billion in dividends last financial year were covered five times over by operating cash flow.

Beyond Mr. Softy, the ranks of blue-chip dividend stocks look pretty thick, thanks in part to this summer's sell-off. For illustrations, consider that Johnson & Johnson (JNJ, news) stock now yields 3.6%, Coca-Cola (KO, news) yields 2.7%, drugs giant Pfizer (PFE, news) 4.4%, Wal-Mart Stores (WMT, news) 2.8%, Exxon Mobil (XOM, news) 2.6%, Procter & Gamble (PG, news) 3.4%, PepsiCo (PEP, news) 3.4%, Chevron (CVX, news) 3.2% and Abbott Laboratories (ABT, news) 3.8%.

I picked those names only because they all crop up near the top of Jeremy Grantham's favorite "high-quality U.S. companies." Grantham's Boston fund firm, GMO, tracks companies with the strongest balance sheets and fundamentals. Those names are all on the list.

If you want to cast your net a bit wider, a FactSet screen of dividend blue chips includes the likes of AT&T (T, news) at 6.1%, Verizon Communications (VZ, news) 5.5%, Eli Lilly (LLY, news) 5.3%, Kleenex's Kimberly-Clark (KMB, news) 3.9%, whole swaths of utilities, Patriot missile maker Raytheon (RTN, news) 3.8%, and all sorts of kitchen-table giants like Kraft Foods (KFT, news) 3.8%, H.J. Heinz (HNZ, news) 3.5%, and General Mills (GIS, news) and Kellogg (K, news) both 3%.

I'm not even looking at really great foreign stocks, though London-based cellular giant Vodafone Group (VOD, news), which owns 45% of Verizon Wireless, is yielding 5.4%, and Nestlé (NSRGY, news) yields 3.7%.

The point is not that any one or two or three of these are conservative investments. It's that a broad basket, from different industries, would surely meet that standard.

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You can build your own portfolio, or just invest in the right large-cap value fund. For instance, one I happen to like -- I have invested in it, as has a member of my family -- is Vanguard Equity-Income (VEIPX). It has a Securities and Exchange Commission (SEC) yield of 2.8% right now. It's a large-cap value fund.

Wellington, a private partnership in Boston with an excellent track record, runs the portfolio for Vanguard. The fees are low -- 0.31% a year -- and only 10% of the fund is invested in financials. For many large-cap funds, that ratio is disturbingly high, above 20%. I view financials as inherently more risky investments.