Key Points
- Rising 10-year Treasury yields, near 5.3% on Sept. 30, have made high-valuation stocks less attractive, prompting a look at dividend alternatives.
- Pfizer, Energy Transfer and Plains All American Pipeline each trade under $30 and offer dividend yields ranging from about 6% to nearly 7%.
- Energy Transfer and Plains All American benefit from midstream oil and gas infrastructure demand, while Pfizer relies on its roughly 95-candidate drug pipeline.
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The 10-year Treasury note yielded around 5.3% in late September. One month before, it was around 4.78%, and it's up by more than a full percentage point from where it was one year ago.
To put that into perspective, the long-term average on the 10-year Treasury note is around 4.25%. However, ever since the financial crisis of 2007 and 2008, investors have been accustomed to far lower long-term rates.
That's been bullish for stocks. But now the opposite is true. Higher long-term bond rates can make high-valuation stocks (i.e., risk-on stocks) less attractive, particularly for investors who are closer to retirement, where preservation of wealth is more important than generating wealth.
There is an alternative for investors who still want both growth and income. Many dividend-paying stocks provide exposure to defensive sectors. When you combine that with the ability to buy shares for under $30 and the opportunity to receive a dividend with a yield above the 10-year Treasury note, investors have an attractive combination.
Pfizer Brings Income and Pipeline Optionality
The biopharmaceutical trade has been dominated by Eli Lilly (NYSE: LLY), which is the leader in the rapidly growing GLP-1 industry. Other companies like AbbVie (NYSE: ABBV) and Merck & Co. (NYSE: MRK) have deep pipelines in sectors like autoimmune diseases and oncology that appeal to investors. Pfizer (NYSE: PFE) has a diverse pipeline of its own, currently including approximately 95 candidates.
Obviously, not all of those drugs will make it through clinical trials, as was the case with its Phase 3 study of its Seagen-derived SV lung cancer therapy, which failed to meet its primary overall-survival endpoint in the overall population.
Pfizer still trades below $30. Shares are up about 14% in 2026, putting the stock roughly in line with its $28.39 consensus price target.
An appealing aspect of PFE for several years has been the company's growing dividend. The company has increased that dividend for 16 consecutive years, with the payout yielding about 6% at recent prices.
Pfizer's revenue is normalizing after its surge in 2021 and 2022 due to its COVID-19 vaccine and therapeutics. It only needs a handful of its pipeline candidates to make it through for PFE to deliver on its long-awaited potential.
Energy Transfer Combines Yield With Midstream Scale
High oil prices are one of the leading drivers of inflation. But it's important that investors understand the reason why. Despite the headline news, there seems to be plenty of oil. The issue is refining that oil and getting it where it needs to go.
That's changing the energy stocks trade from upstream exploration and production companies to the midstream companies that are responsible for getting oil and natural gas where it needs to go.
That leads investors to Energy Transfer (NYSE: ET). The company is a steady stock in a normal cyclical oil cycle. But many analysts believe this is still the early stages of a long-term bull cycle for oil. Energy Transfer is well-positioned to maximize its current pipeline network and strategically add to that network if needed.
ET is up over 20% in 2026, but analysts have a consensus price target of $24.36, which implies over 20% growth. Plus, the company has a dividend yielding nearly 7%, and Energy Transfer has continued to gradually raise its quarterly payout.
Plains All American Turns Permian Volumes Into Income
If Energy Transfer is the diversified midstream play, Plains All American Pipeline (NASDAQ: PAA) is the focused one. The company moves crude oil from the Permian Basin to refiners and export terminals on the Gulf Coast. In May, Plains sold its Canadian natural gas liquids business. That leaves it as a near pure play on crude oil logistics.
Plains is paid mainly on the volume moving through its system, not the price per barrel. Think of it as a toll road. As long as Permian producers keep drilling, the traffic keeps flowing.
The fundamentals support that view. In its Q2 2026 earnings report, Plains reported adjusted EBITDA of $738 million. Its crude oil segment delivered $690 million, up more than $100 million from the first quarter. Management also raised its outlook for Permian production growth. However, it expects most of that benefit to show up in 2027.
PAA trades below $25 and is up approximately 32% in 2026. Analysts are cautious, with a consensus Hold rating and price target of $25.43. That suggests limited upside based on the consensus, although Mizuho recently raised its target to $30.
The real draw is the company's dividend. PAA pays an annual distribution of $1.67, yielding about 7%. The payout has grown for five straight years.
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