Picture two envelopes on the kitchen table. One holds interest from a government bond, and the other holds a dividend check from a company you own.
For years, that choice was easy. Bonds paid almost nothing, so income-seekers preferred high-yield dividend stocks.
That math has changed.
The Treasury note that matures in a decade now yields around 5.3%. A retiree can lock in steady income without being exposes to stock market volatility.
So why take on stock market risk at all? Because history says dividends do far more than pay the bills.
Why dividends matter for investors
Dividends have quietly driven stock returns for nearly a century.
According to a report from Hartford Funds, dividends accounted for 33% of the S&P 500’s total return between 1940 and 2025.
Here’s what separates a dividend from a bond payment:
- A Treasury coupon stays fixed until the note matures.
- A dividend can rise as company profits grow.
- Reinvested dividends buy more shares, which then pay their own dividends.
- Share prices can climb over time, allowing you to benefit from capital gains.
Here’s a simple example.
Allocate $10,000 in a Treasury note at 5.3%, and you collect $530 a year. Put the same amount in Altria at about 6.5%, and you collect roughly $650.
This gap will grow if the dividend keeps rising.
Verizon stock is a a telecom giant
Similar to other telecom companies, Verizon had a customer problem. More subscribers were leaving each quarter, a measure the industry calls churn.
Then CEO Dan Schulman took over last October and focused on customer retention. The turnaround is showing up in the numbers.
Also Read: Verizon takes on T-Mobile with new phone plan for customers
Consumer postpaid phone churn fell to 0.84% in the second quarter, down from 0.90% in the first quarter.
In Q2, Verizon (VZ) reported free cash flow of $6.4 billion, up 24% year over year. Verizon raised its full-year FCF growth forecast to between 9% and 10%.
“We want to earn back your confidence with execution, not with promises,” Schulman stated.
With a quarterly dividend expense of around $2.9 billion, Verizon’s dividend payout ratio is less than 50%.
CFO Tony Skiadas made the priority clear at Citi’s Global TMT Conference on Sept. 9.
“Our commitment to the dividend is ironclad, and we’ve raised the dividend for 20 straight years,” he said.
Dan Schulman, CEO of Verizon, focuses on execution.
Altria stock is a Dividend King
Altria (MO) faces a shrinking market and sluggish customer spending. Its domestic cigarette volumes fell 3.2% in the second quarter.
Yet the checks keep growing. Altria just raised its quarterly dividend to $1.11 per share, its 61th increase in 57 years, making it a Dividend King.
The secret is pricing power. Marlboro held 59.6% of the premium cigarette segment, and smokeable products earned an adjusted margin of 64.8%.
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Adjusted earnings per share rose 4.9% to $2.80 in the first half. Altria also returned nearly $3.9 billion to shareholders via dividends and buybacks in this period.
“First and foremost, we remain committed to delivering strong shareholder returns. Obviously, our primary vehicle to do that is by way of the dividend,” CFO Heather Newman said on the second-quarter earnings call.
Verizon and Altria dividend ratios compared
Key dividend ratios for Verizon
- Annual dividend: $2.83 per share ($0.7075 quarterly)
- Dividend yield: 6.2%
- Free cash flow payout: About 58% ($5.9 billion in dividends vs. $10.2 billion in first half free cash flow)
- Dividend streak: 19 straight years of increases
- 20-year dividend growth CAGR: 2.8%
Key dividend ratios for Altria
- Annual dividend: $4.44 per share
- Dividend yield: About 6.4%
- Dividend streak: 57 years
- Free cash flow payout 2026 (e): 74% ($7.4 billion in dividends vs. $10 billion in 2026 FCF)
- 10-year dividend growth CAGR: 6.2%
The risks dividend investors should weigh
The U.S. government backs a Treasury note, while a dividend is not guaranteed.
So, it’s essential to gain exposure to blue-chip stocks in mature markets that can generate cash flows across market cycles.
Verizon’s wireless service revenue still slipped 0.7% in the second quarter. Meanwhile, Altria’s customers may pull back spending amid a challenging macro environment.
Inflation is outpacing wage growth, pushing many toward cheaper discount cigarettes, CFO Heather Newman said. Discount brands gained 2.6 share points in the second quarter.
“The consumer remains under pressure. Gas prices and inflation remain elevated,” Altria CEO Sal Mancuso said.
Still, both companies keep raising their forecasts and paying down debt. For patient investors, that second envelope may be worth opening.
