Treasuries Now Offer 2.66% Above Inflation. Are Dividend Stocks in Trouble?
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Although Wall Street’s best-known dividend payers have spent 2026 rewarding patient shareholders, the bond market has raised the bar. The 10-year Treasury Inflation-Protected Security, or TIPS, yielded 2.66% on November 9, 2026, up from 1.84% on November 10, 2025. That yield is earned above inflation, and the U.S. Treasury backs it for anyone who holds to maturity. But the last time real yields climbed this high, the stocks that income investors rely on most took the first hit.
Here is how it works. A TIPS holder’s principal rises with the Consumer Price Index, so the 2.66% is a gain in purchasing power. A dividend stock has to grow its payout to keep up with inflation. That is why rising real yields tend to pull money out of income stocks. Four classic names, Johnson & Johnson (NYSE:JNJ | JNJ Price Prediction), Procter & Gamble (NYSE:PG), Coca-Cola (NYSE:KO), and Exxon Mobil (NYSE:XOM), now yield less than the TIPS real return. Realty Income (NYSE:O) and Verizon (NYSE:VZ) still yield more.
| Company | Dividend Yield |
|---|---|
| Verizon | 6.19% |
| Realty Income | 5.16% |
| Procter & Gamble | 2.59% |
| Exxon Mobil | 2.56% |
| Coca-Cola | 2.13% |
| Johnson & Johnson | 1.90% |
2023 Already Ran This Experiment
The 10-year TIPS yield climbed from 1.34% on January 6, 2023, to 2.52% on October 25, 2023. Realty Income, the most bond-like stock in the group, posted a total return of -21.98% from the end of 2022 through October 2023, dividends included. Over the same period, an index fund tracking the benchmark S&P 500 returned 10.58%. The gap was the price of owning a yield proxy while the risk-free real return kept rising.
Then real yields turned. The TIPS yield slipped to 2.32% by November 13, 2023. From the end of October through December, Realty Income returned 22.31%, ahead of the S&P 500 fund’s 14.12%. The pattern from that period: the losses came early, and the recovery came only after real yields topped out.
2026 Rhymed, Then Went Its Own Way
This year the TIPS yield rose from 1.94% on January 2 to a high of 2.95% on October 5. Realty Income followed the 2023 script. It fell 10.95% in September as real yields jumped from 2.44% to 2.93%. Year to date, it is up only 9.84%.
The rest of the group moved in the opposite direction. Coca-Cola is up 40.27% year to date, Exxon 38.63%, Johnson & Johnson 38.27%, P&G 20.72% and Verizon 19.87%. The S&P 500 fund is up 10.82%. What changed was earnings growth.
Coca-Cola raised its comparable EPS growth target to at least 11%, and Exxon’s quarterly free cash flow rose to $19.10 billion. Verizon added 406,000 postpaid phone net additions, up from 44,000 a year earlier. P&G reported core EPS of $2.00 against a $1.89 consensus.
Valuations Leave Less Room for Error
That rally has made these stocks more expensive. Coca-Cola trades at about 32 times earnings, Exxon at 23 and Realty Income at 54. P&G trades at about 24 times the $7.00 midpoint of its fiscal 2027 core EPS guidance. When a stock yields less than TIPS, dividend growth has to carry its valuation. Coca-Cola raised its quarterly payout to $0.53 from $0.51, and Johnson & Johnson raised its to $1.34 from $1.30.
Realty Income faces the toughest comparison with Treasuries, as we flagged ahead of its third-quarter report. The REIT committed $2.6 billion at a 6.8% initial cash yield, with a spread of about 170 bps over its cost of capital. It also announced its 116th consecutive quarterly dividend increase.
One Signal Will Show Whether History Repeats
The 2023 pattern points to one gauge: the 10-year TIPS yield measured against its October high. The real yield has fallen 0.29 points in a month, to 2.63% on November 6. Realty Income is already up 9.86% over that month, which looks like the start of the late-2023 rebound. If the TIPS yield climbs back above 2.95%, the 2023 script suggests Realty Income and Verizon will fall first. I’m also following Realty Income’s 170-basis-point investment spread, because a narrower spread would mean rates are eating into the business itself.
Over the long run, Wall Street’s dividend stalwarts have come through every rate cycle. Adjusted for dividends and splits, Coca-Cola has gained 219.67% over the past decade and Johnson & Johnson 211.92%. History suggests that when real yields topped out, investors who held through the pressure got rewarded. A new high in real yields would mean income investors are in for more pain first.
Contact [email protected] for any questions or corrections.
Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
