I buy 6-month CDs at E-Trade Bank. These 6-month CDs are currently yielding 5.04% with APY of 5.17%. Not bad compared to what they've been yielding for the past few years.
I follow a laddering strategy for CDs similar to what you would do for muni bonds. I spread out my CD purchases by purchasing $50,000 worth of CDs every month for the past 5 months. I will then have a maturing CD every month from now on that I can roll over into some other investment in a rising interest rate environment. Most likely I will continue rolling my CD money over to other CDs, since I have enough cash on hand for other investments.
The downside of CDs is having to pay federal and state income taxes on the interest. So for the highest income bracket, 35% goes to federal, and 10% goes to California state. You lose almost half the yield to taxes.
Here's a link to figure out the best current CD rates: