Overview
- Long-term U.S. Treasury yields have climbed so that the 10-year is about 4.8% and the 30-year stands above 5.2%, exceeding yields on some top dividend stocks.
- PepsiCo's forward dividend yield is roughly 4.3% while the company has raised its payout for 54 consecutive years, supporting expectations of growing future dividends.
- An analyst argues that, despite the higher immediate income from Treasuries, PepsiCo may be the better choice for passive, long-term income because of dividend growth and potential capital gains after a roughly 30% drop from its 2023 peak.
- Treasuries offer government-backed, fixed semiannual interest payments and stable principal if held to maturity, but those fixed payments do not grow and can lose buying power if inflation persists.
- The rise in long-term yields reflects heavier long-term Treasury issuance and weaker official demand, which raises the term premium and pushes borrowing costs and equity discount rates higher with broader effects on mortgages and corporate financing.