When looking for a stock that pays a higher dividend that Treasury yields, investors don’t have too many choices these days. U.S. government bonds are enjoying yields not seen in over a decade thanks to the Federal Reserve’s interest rate hikes, which began in March 2022. On Thursday, the 10-year hit 4.482% , the highest since 2007 and up from 1.6% in January 2022 , after initial jobless claims came in lower than expected. That played into concerns that the central bank would continue with its tight monetary policy. On Wednesday, the Fed indicated it would hike one more time this year, and cut rates fewer times in 2024 than previously anticipated. Dividend stocks, on the other hand, are getting harder to find as companies hold on to their cash amid concerns about the economy. At the same time, they are generally thought of as a way to play defense during a slowing economy since they can offer stability and income. To find stocks that pay dividends higher than the 10-year Treasury yield, CNBC used the new CNBC Pro Stock Screener tool to search for names with yields higher than 4.5%. We also removed stocks with a yield above 8% to rule out yield traps, which are potentially troubled companies that offer a high payout to attract investors. In addition, we screened for stocks with a debt-to-equity ratio above 60% to avoid companies with too much debt. Pioneer Natural Resources has the highest dividend yield at 7.2%, as well as a debt-to-equity ratio of 24.2%. The oil and gas exploration and production company, which is down about 2% year to date, could also benefit from the recent rally in oil prices. Brent crude futures were trading near $94 per barrel on Thursday, up from the low to mid-$70s seen over the summer. West Texas Intermediate crude futures were hovering around $90 a barrel, also up significantly from summer lows. Meanwhile, Goldman Sachs recently raised its 12-month forecast for Brent to $100 per barrel and $95 per barrel for WTI. The bank also named Pioneer as one of its top plays on higher oil prices, forecasting 13% upside for the stock. “We believe that the company has turned the corner on both capex and volume execution, as seen by strong performance in 2Q,” analyst Neil Mehta wrote in a Thursday note. Other energy names on the list include Coterra Energy , which yields 6.1% and has a 17.3% debt-to-equity ratio, and Diamondback Energy , which has a 4.5% yield and 42.1% debt-to-equity ratio. Several financial firms also made the cut, including Citizens Financial . Citizens’ stock, which has a 6.1% dividend yield and 43.1% debt-to-equity ratio, was hit alongside other regional banks during the banking crisis earlier this year. While it is up 11% from its 2023 closing low of $24.80 on May 11, it is still down 30% year to date. Lastly, Best Buy has a 5.2% dividend yield and 40.9% debt-to-equity ratio. The retailer posted fiscal second-quarter earnings in late August that beat on both the top and bottom lines. Best Buy also said it anticipates this year will be the low point in demand for technology, with the consumer electronics industry seeing stabilization and possibly growth in 2024. Shares are down about 12% year to date.
