10-Year Bond Yields Have Now Fallen 31% in 2010

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If you're a long-term investor looking for steady income, common wisdom has often steered you towards 10-Year Treasury bonds. With treasury yields falling a massive 31% since the beginning of the year, however, the best dividend stocks are becoming the clear choice.

Back in January, 10-Year Treasuries yielded a healthy 3.64% - not bad for investors looking for steady income. On Thursday, though, bond rates were teetering on a 17-month low at a paltry 2.55% annual yield.

For income investors, 2.55% just isn't going to cut it. Especially with so many high-quality dividend stocks out there.

In a recent interview with AOL DailyFinance , Lawrence Carrel, author of Dividend Stocks for Dummies , pointed toward dividend stocks as a far superior option.

"In a volatile environment, where the stock market can go down and bonds are paying extremely low interest, a good place to beat the rate of return on bonds is dividend stocks," Carrel says. "If you can get potential upside in your investment at a yield that is 60% to 100% better than the 10-year Treasury, why wouldn't you take it?"

Fund managers, too, have seen a shift in the markets that favors dividends. In a recent interview on CNBC , Broadleaf Partners' Doug MacKay said "I think stocks over bonds make complete sense … We've got a disconnect in the markets between fixed income and equities."

As more and more ultra-conservative investors pile into Treasuries, their yields continue to fall. Meanwhile, dozens of high-quality dividend stocks with yields far-outpacing bonds are ripe for the picking.

Are dividends guaranteed like T-Bills? No. But consider this: a whopping 96 dividend stocks have increased their dividend payouts every year for the past 25 years .

That should be good enough for just about anybody.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Stocks

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