Skip the Ten Year Bond? 3 Separate Aristocrats to consider now

The 10-year Treasury note is a useful benchmark for cash-oriented investors. But that does not apply only to those who buy bonds. When the yield on the 10-year Treasury rises, it raises a legitimate question for anyone who owns dividend-paying stocks: Why take equity risk when the government guarantees you a fixed return?

That is a worthy challenge. Buy a 10-year Treasury at 4%, and you’ll get that 4% every time until maturity, backed by the full faith and credit of the US government. No board of directors can reduce yield, and no earnings miss can reduce your principal.

But that almost risk-free return comes with its own silent risk: inflation. A fixed coupon that looks attractive today may bring much less purchasing power ten years from now. For investors to make the most in real terms, the bond’s yield must exceed inflation over the entire holding period.

That’s not always a safe assumption, which is why equity stocks, with their growing yields and share price potential, present a viable alternative to fixed income.

Dividend Paying Stocks Offer a Different Proposition

When investors buy dividend stocks, the dividend yield carries risk, and the stock price will change. But investors who accept that equity risk get something that Treasury holders don’t: the power to capitalize on capital and, for the right companies, a dividend that grows over time.

That combination changes the equation. An investor who buys a stock with a 3% dividend yield today may earn a much higher yield on his initial investment five or 10 years from now, while sitting on capital gains. That looks better than a fixed rate bond.

Some dividend-paying stocks make that case even stronger. A select group of companies currently offer dividend yields that exceed the 10-year Treasury rate and hold an additional distinction: membership in the Dividend Aristocrats club, a designation reserved for companies that have increased their dividend payouts for at least 25 consecutive years.

These are not high-flying growth stocks. But for investors who prioritize income, volatility, and inflation protection, they represent something the 10-year Treasury cannot: a return with potential for growth.

Real Estate Income: Monthly Profits With a Critical Perspective

When it comes to high-yielding stocks, Realty Income (NYSE: O) it is at the top of many lists. One reason is that the company is a real estate investment trust (REIT)—a corporate structure that is required by law to pay at least 90% of its taxable income to shareholders in the form of dividends. Realty Income has become a cornerstone of income investors’ portfolios, one of the most reliable stocks of the month and yield greater than 5% mid April.

But the key to this investment thesis is capital growth. That is why it is important to note that REITs have worked hard in the last five years, and iO is no exception. The stock price fell about 4% during that time. However, the total return, which includes dividends, was more than 27%.

That’s not a market-beating return, but the stock is up more than 10% this year. That may be because investors believe that lower interest rates will stimulate the housing market. Binary betting, but another monthly profit that makes it worth taking.

Hormel: A Game Changer With Deep Value Appeal

Hormel Foods (NYSE: HRL) has been participating in the market for several years. In fact, over the past five years, HRL shares have fallen nearly 55%, with most of that loss occurring over the past three years. That comes despite a dividend of yield above 5.5%.

Some of the reasons for Hormel’s struggles—including chicken recalls and plant fires—are beyond the company’s control. However, the stock is attractively priced. Also, the company has a business model that includes both brand names and its own private label products. That’s a good hedge for consumers who may feel under pressure from sticky inflation.

Analysts give HRL a consensus price target of $27, indicating a potential upside of about 30%. That is coupled with a dividend that offers asymmetric upside.

Kenvue: Secured Income with Potential Buyer Acquisition

Kenvue (NYSE: KVUE) another word for sector of the consumer base consideration. The stock has fallen more than 20% in the past 12 months as consumers look to private label brands instead of Kenvue’s brand names.

But analysts have a consensus price target of $19.33 on KVUE, which would represent a gain of about 10% from the stock’s price in mid-April and is supported by expectations for earnings growth of about 8%. That could increase if consumers get more relief from food prices later this year.

But even if that doesn’t happen, investors get budget security through current yield about 4.7%. Kenvue inherited its Dividend Aristocrat status because it exited Johnson & Johnson (NYSE: JNJ) on August 23, 2023, suggesting that the company will continue to raise its payout to benefit long-suffering shareholders.

Companies mentioned in this article:

Company	Current Price	Price Changes	Dividend Yield	The P/E ratio	Consensus ratio	Consensus Price Target
Sales Revenue (O)	$64.14	+0.3%	5.07%	54.81	Hold on	$66.39
Hormel Foods (HRL)	$20.96	+1.4%	5.58%	23.54	Hold on	$27.00
Kenvue (KVUE)	$17.45	+0.8%	4.76%	22.66	Hold on	$19.33
Johnson & Johnson (JNJ)	$233.65	-2.1%	2.29%	27.01	Buy Medium	$251.52

About Chris Markoch

Experience

Chris Markoch has been an associate editor and contributing writer for DividendStocks.com since 2018.

• Professional Background: Christopher Markoch is a freelance writer and market analyst with over 30 years of marketing communications experience, including working with financial services firms and banks. His unique combination of communication skills and market knowledge allows him to dissect complex financial topics for individual investors.
• Confirmation: He holds a Bachelor of Arts degree in Business and Organizational Communication from the University of Akron in Akron, Ohio.
• Financial Experience: Chris has been an editor and contributing writer for DividendStocks.com since 2018 and has written for InvestorPlace. He began writing about finance and investing in 2017, bringing a strong focus on helping readers make honest, informed decisions.
• Writing Focus: He specializes in investing, dividend-paying stocks, and retirement-focused strategies. His work is aimed at individual investors who want to build stable, income-generating portfolios.
• How to Invest: Chris emphasizes the importance of investing in income while maintaining a focus on context and clarity. He believes that fundamentals and technology are important, but they are only truly useful when paired with an understanding of the company’s story. That perspective shapes both his investment decisions and the guidance he gives students.
• Motivation: “A story about a company or a stock is important to me,” Chris said. “Fundamentals or technical actions are interesting, but for no reason, they have no context for retail investors. That’s what I aim to deliver.”
• Fun fact: Christopher credits thought leaders such as Keith Fitz-Gerald and Shah Gilani for their keen market insights.
• Areas of Expertise: Value investing, retirement stocks, dividend stocks, individual investing

Education

Bachelor of Arts in Business and Organizational Communication, The University of Akron, Akron, Ohio

Previous Experience

InvestorPlace