Even With 10-Year Treasury Yields at a 20-Month High, I'd Still Rather Buy This S&P 500 Dividend Stock for Passive Income in September.
The problem with buying bonds is that they can't keep up with inflation, but stocks with growing dividends can.
Overview
If all you care about is generating income, then you'll likely find the roughly 4.8% yield of the 10-year Treasury more attractive than PepsiCo's (NASDAQ: PEP) 4.2% yield. The 60 basis point lift in yield amounts to roughly 14% more income in your pocket. But there's one very big problem with this trade-off that I can't justify. Here's why, despite a lower yield, I think PepsiCo still beats Treasuries.
A Treasury is a bond issued by the U.S. government. The deal is that you loan the government money, and it pays you interest on that loan. The interest you earn stays the same throughout the life of the loan. And when the loan matures, you get your principal back. The big problem with this arrangement boils down to inflation, which is running hot right now.
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Originally published at www.fool.com.
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