"Sure, you can get a yield of around 4% from 10-year U.S. Treasury bonds, but you can probably achieve better returns with dividend-paying stocks. Bear in mind, you can get both share-price gains and dividend payments from some stocks. Consequently, if you put your money in dividend stocks, you have a chance at beating the predictable returns from government bonds."
"Lockheed Martin stock is a perfect example of this. After holding LMT shares for a full year, you should expect to get a forward dividend yield of 2.06%. Then, to outperform a 4% bond, Lockheed Martin stock would only need to rise more than 2%. That's very likely since Lockheed Martin is a revenue-rich and profitable defense business."
"As the data will show, Lockheed Martin's sales improved from $67.571 billion in 2023 to $71.043 billion in 2024, to $75.048 billion in 2025. All told, Lockheed Martin reported $5.017 billion in net earnings for 2025. With cash and cash equivalents totaling $4.121 billion at the end of last year, it's fair to say that Lockheed Martin is financially robust."
Dividend-paying stocks present an alternative to Treasury bonds for passive income investors seeking better returns. While 10-year U.S. Treasury bonds yield approximately 4%, dividend stocks can potentially exceed this through both dividend distributions and capital gains. Government bond yields are expected to decline in the coming year, making dividend stocks more attractive for investors willing to accept volatility for higher returns. Lockheed Martin exemplifies this opportunity, offering a 2.06% forward dividend yield while requiring only modest share-price appreciation to outperform bonds. The company demonstrates financial strength with growing revenues from $67.571 billion in 2023 to $75.048 billion in 2025, and substantial net earnings of $5.017 billion in 2025.
Read at 24/7 Wall St.
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