CHICAGO (AP) — Returns of eight percent or better are hard to find in this grim economy. But they are there for the taking — in corporate bonds.

Investors who have lost faith in stocks' near-term prospects and are fed up with government bonds' minuscule yields have been scooping up the bonds of cash-needy companies at a brisk pace in recent weeks.

Results so far have rewarded such moves, especially among those with an appetite for extra risk in their bonds. While the Standard and Poor's 500 stock index fell 8.4 percent last month, the Barclays' index of high-yield or junk bonds rose six percent.

Let the bond-buyer beware, however. Even if you stick to higher-quality bonds, an investment with a staid and reliable image can be as stomach-churning as the stock market if you don't choose companies well.

"For investors that like to take a little bit more risk, the corporate bond market represents a great opportunity," said Doug Kreps, managing director at Fort Pitt Capital Group, a Pittsburgh-based money management company.

Investors can be blinded, he said, to the potential downside: losing most or all of your money if the company defaults. Anyone who bought Bear Stearns or Lehman Brothers bonds can attest to that.

Experts advise investing in corporate bond funds rather than individual bonds so your money isn't riding on the fate of a small number of companies.

Corporate bonds are a gray area for many individual investors, who directly hold only about 10 percent of them. Institutions such as pension funds hold the rest.

Companies issue bonds to drum up financing for large projects and procure cash, which is in particularly tight supply during the recession. They pay higher interest rates than government bonds because of the added risk investors must take on in backing a single company.

Investors typically receive semi-annual interest payments and then the full face value of the bond when it matures, anywhere from one to 30 years.

Yields have been much higher than usual since late fall because they've been needed to persuade skittish investors to buy the issues.

It has worked. US corporations sold more debt in December ($108 billion) and January ($90 billion) than in the previous six months combined, according to data-tracker Dealogic.

Art Shenkin, an investing buff from Greenwood Village, Colorado, has dabbled in corporate bonds over the years and knows an opportunity when he sees one. The 76-year-old retired accountant recently bought $70,000 worth of Goldman Sachs bonds with an almost unheard-of yield of 7.65 percent. He bought them on the secondary market — through an online broker — so they had just three years remaining until they matured.

But Shenkin is wary of delving any further into the corporate bond market. As the holder of $130,000 in Ford Motor Co. bonds, he was sweating out that company's alarming nosedive until the bonds matured last month.

"Everything is so risky these days," he said. "You never know at any given moment which company is going under."

Risk or no, savvy investors can't help but be tempted by the recent corporate offerings.

The big attraction has been the eyebrow-raising spread, or the difference between what investors can get on corporate bonds versus the yield on risk-free Treasuries.

Spreads for investment-grade bonds — those deemed of high- and medium-quality by credit-rating agencies — remain historically high despite declining since hitting a record 6.56 percent in early December. They were at 5.44 percent last week, according to Merrill Lynch & Co data.

That means companies are still pricing in dire scenarios in order to lure buyers.

Brian Battle, vice president of trading at Performance Trust Capital Partners in Chicago, says investors who want to take the plunge on individual bonds should select companies that seem best-positioned for hard times.

He singled out Caterpillar Inc., among others, as a "pretty good credit" despite declining demand for its heavy equipment in a global recession. As of Tuesday, a 10-year Caterpillar corporate bond carried a six percent yield — more than double the 2.80 percent yield of a 10-year Treasury.

Still, Battle said, there is significant risk in most any individual corporate bond these days.

For those willing to accept that, experts recommend focusing on the top tier of high-grade debt — A-rated or BBB+. Those interested in shorter-term bets could buy one-year or five-year bonds, or go to the secondary market like Shenkin and find tradable bonds of varying maturities.

Keep in mind, corporate bond funds offer the comfort of diversification in exchange for less eye-popping yields. But even there, investors should be aware how exposed they are to hard-hit sectors such as financials. Even many top-rated investment-grade bond funds posted losses last year.

While acknowledging the strong upside, fixed-income analyst Salvatore Reres of Thomson Reuters calls the current situation "a market for the brave".

"With companies like Lehman Brothers failing and all-American companies like Ford looking like they might fail," he said, "do you really want to be betting that a company's going to be here in 10, 20, 30 years from now?"