UPS, Verizon and Altria are among dividend stocks whose yields now match or beat the 10-year Treasury, drawing income investors to defensive equities. Recent cuts at BCE and Telus show why earnings coverage, not yield alone, determines whether a payout survives.
United Parcel Service, Verizon Communications and Altria Group are among the companies whose dividend yields now match or exceed the 10-year Treasury, a threshold drawing income investors back to defensive equities as bond yields hold near recent highs.
The screen has become a central test for yield-seeking portfolios. With the S&P 500 at 7,680.20, up 0.23 percent, and the Dow Jones Industrial Average at 53,584.30, up 0.23 percent, dividend payers with earnings support are competing directly with risk-free paper for the same investor dollar. The Nasdaq 100 rose 0.56 percent to 29,229.20, while the Russell 2000 gained 0.30 percent to 3,009.10.
The appeal rests on a simple trade: a stock yielding more than the 10-year Treasury, with earnings that cover the payout, offers income plus potential capital appreciation. That combination has kept defensive sectors in favor as the VIX holds at 23.57, above its 12-month average of 19.06 and well above the December 2025 low of 13.47 that compressed option premiums and pushed income strategies into retreat.
The risk is that a high yield can mask a fragile payout. BCE cut its annualized dividend by 56.1 percent in May 2025, reducing it from $3.99 to $1.75 per share to strengthen its balance sheet, and Telus followed on July 31 with a 55 percent reset, trimming its quarterly payout from $0.4184 to $0.1875. Both moves show why earnings coverage, not yield alone, determines whether a dividend survives. BCE now yields about 5.9 percent and Telus roughly 5 percent, yet both cut payouts within the past year, a reminder that a double-digit yield can disappear in a single board decision.
Berkshire Hathaway offers the counterpoint. It pays no dividend at all, yet holds roughly $397.4 billion in cash with a debt-to-equity ratio near 17.7 percent, giving management the flexibility to buy back shares, acquire businesses or hold Treasuries until opportunities appear. "I trust Berkshire Hathaway infinitely more than any Canadian telecom stock," said Tony Dong, a certified ETF advisor and contributor at The Motley Fool Canada.
For UPS, Verizon and Altria, the test is whether their yields hold up as the 10-year Treasury moves. If bond yields climb further, the bar for dividend stocks rises; if they fall, income equities regain their edge. The comparison will reset with each Federal Reserve rate decision, making the yield spread the metric to watch for investors weighing income against total return.
This article is for informational purposes only and does not constitute investment advice.
