The US 10-year Treasury yield touched 5.15%, its highest since the Great Financial Crisis, in what was its sharpest one-day move since April 2025.
The massive surge was catalyzed by hotter-than-expected PMI data that revived fears of more Fed tightening.
The US central bank has already raised its benchmark interest rates by 25 basis points this month, its first increase since 2023, with one more projected for the remainder of this year.
With Treasuries now paying over 5%, the resilience of income stocks is under the microscope. Yet, three names – Verizon, Energy Transfer, and AGNC Investment – remain worth owning.
Verizon Communications (VZ)
Verizon stock currently pays a dividend yield of 6.08%, still about a percentage point higher than the 10-year’s peak.
Additionally, valuation supports the argument. VZ shares currently trade at about 9.5 times forward earnings, and the company’s free cash flow reliably covers the dividend.
Verizon’s underlying business is recovering as well: last quarter, it added 184,000 postpaid phone subscriptions, its best result in five years, as churn fell under a service-first strategy.
So, it’s reasonable for income buyers to bet that a low valuation and steadier subscriber base will outlast a shrinking yield premium.
Wall Street currently rates Verizon Communications at Overweight, with the mean price target of about $51 indicating potential upside of nearly 10% from here.
Energy Transfer (ET)
Energy Transfer’s capital returns were 2.2 times covered by distributable cash flow in its recently concluded quarter, and about 90% of its adjusted EBITDA is fee-based.
Management plans 3% to 5% annual distribution growth – and its Permian gas position connects it to artificial intelligence (AI) data center power demand and natural gas liquids exports.
Plus, the dividend yield of 6.64% sits meaningfully above the 10-year yield.
Note that ET shares have pulled back this month, shrinking the forward multiple to an “attractive” 12x.
Wall Street also currently rates Energy Transfer at Overweight, with the mean price target of about $25 indicating significant upside potential.
AGNC Investment (AGNC)
For investors seeking huge income payouts to offset yield pressures, AGNC Investment presents a compelling case.
Operating as a mortgage real estate investment trust (mREIT), the company invests rather heavily in agency residential mortgage-backed securities backed by the US government.
AGNC currently offers a staggering dividend yield of about 14.5% paid out on a monthly schedule, leaving Treasury yields far behind.
While rising interest rates and mortgage spread volatility pose ongoing book value risks, AGNC Investment’s net spread and dollar roll income nonetheless continue to easily cover its payout.
According to The Wall Street Journal, analysts currently rate AGNC shares at Hold only, but their mean price target of over $11 still represents a little under 15% upside potential from current levels.
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