Thinking About Buying 10-Year Treasury Notes Yielding 5.3% Instead of Dividend Stocks Like Coca-Cola? Consider These 3 Factors First.
2026-10-03 15:10
•Daniel Foelber •The Motley Fool
•••••• •• Axe Cap view
Why South Africans Should Think Twice Before Choosing 10-Year Treasuries Over Dividend Stocks
Higher yields on US 10-year Treasuries may look tempting, but local investors should weigh inflation and growth potential in dividend stocks.
US 10-year Treasury notes offering 5.3% yields appear attractive compared to some dividend stocks, but for South African investors, the picture isn’t that clear. The rand is volatile, and the dollar strength that drives Treasury yields can weigh on local equities like Naspers and Prosus, both reliant on offshore earnings. Yet, solid dividend growers such as Shoprite or Dividend Aristocrats like Sasol provide inflation-linked cash flow and potential capital growth that Treasury notes can’t match. Treasuries are safe but vulnerable to price drops if rates climb further, which has already hit bond-like ETFs hard in recent years. Dividend stocks carry company and economic risk but tend to rise with inflation, something the rand is no stranger to. If you want income with growth, holding part of your portfolio in strong JSE dividend names makes sense. But if you rely purely on fixed income in USD, beware how your rand returns may erode. this is just our opinion and not financial advice
I’d trim exposure to US fixed income ETFs like TLT and selectively buy blue-chip JSE dividend stocks such as Shoprite and Sasol for inflation protection and growth. Keep an eye on rand strength to tweak positions accordingly.
- Shoprite
- Sasol
- USD/ZAR
- TLT
- Further USD strength causing rand weakness and earnings pressure on JSE counters
- Rising US rates pushing down Treasury bond prices more
6/10
With 10-year Treasury notes yielding 5.3%, investors face a choice between fixed-income securities and dividend stocks. The article argues that while Treasuries offer higher current yields and lower risk, dividend-growth stocks like Coca-Cola can provide superior long-term returns through rising dividends and capital appreciation, plus better inflation protection. Key considerations include bond price volatility if rates change, dividend growth potential, and inflation resistance.
Our take is based on reporting first published by The Motley Fool.
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