NEW YORK, August 7, 2026, 10:09 EDT — U.S. trading begins with markets opening.
- Chances of a September rate hike dropped to 43.9%, down from 57%, following the release of the jobs report.
- A basket of four dividend stocks produced a yield of 6.07%, standing just 146 basis points higher than 10-year Treasury notes.
- Initial projection: Payout ratios for 2026 varied between 37.6% and 91.4%.
Chances of a U.S. rate increase dropped significantly on Friday as July payroll numbers declined. That improved the comparative appeal of dividend stocks, although the effect was uneven.
At Friday morning’s prices, four major large-cap stocks featured on a single connected dividend filter delivered an average yield of 6.07%. This represents a premium of just 146 basis points compared to the 10-year Treasury yield of 4.61%.
A 5% drop in share price would offset approximately 3.4 years of the additional income. The calculation does not consider taxes, reinvestment, or any potential rebound in prices.
Jobs surprise sparks market repricing
| Indicator | Latest reading | Comparison | Change |
|---|---|---|---|
| July nonfarm payrolls | -23,000 | +80,000 estimate | -103,000 from estimate |
| June payrolls | +20,000 updated | +57,000 previous | -37,000 adjustment |
| September hike probability | 43.9% | 57.0% prior to data | -13.1 percentage points |
| Two-year Treasury yield | 4.16% | Intraday movement | -8 basis points |
| 10-year Treasury yield | 4.61% | Intraday movement | -6 basis points |
The unemployment rate dropped to 4.1%, in part due to a decrease in labor-force participation.
The Federal Reserve kept its target range at 3.50%-3.75% last week. Three policymakers favored raising rates by 0.25 percentage point. Lindsay Rosner at Goldman Sachs Asset Management, part of Goldman Sachs Group NYSE:GS, said “slowing jobs growth helps support a September hold.” She added inflation remains the “ultimate arbiter.” Reuters
Seeking Alpha’s monthly screening narrowed about 7,500 U.S.-listed securities to three separate groups, each containing five stocks. The average yields spanned 4.24% to 7.66%, with the top-yield group carrying greater concentration and turnaround risks.
The additional linked screen featured Altria Group NYSE:MO, Comcast NASDAQ:CMCSA, Pfizer NYSE:PFE and United Parcel Service NYSE:UPS. Based on Friday’s closing prices, each stock returned yields above 5%. However, their safety margins varied significantly.
Comparing dividend yield to the Treasury benchmark
| Stock | Price at about 09:54 EDT | Indicated annual dividend | Dividend yield | Spread over 10-year | Years of excess income erased by 5% decline |
|---|---|---|---|---|---|
| MO | $68.23 | $4.24 | 6.21% | +1.60 points | 3.1 |
| CMCSA | $25.23 | $1.32 | 5.23% | +0.62 points | 8.0 |
| PFE | $26.47 | $1.72 | 6.50% | +1.89 points | 2.6 |
| UPS | $103.88 | $6.56 | 6.32% | +1.71 points | 2.9 |
| Average | — | — | 6.07% | +1.46 points | 3.4 |
The final column shows a sensitivity calculation: a hypothetical 5% capital loss divided by the yield premium of each stock. This should not be interpreted as a price prediction. Prices, dividends, and Treasury benchmark:
Altria paid 160 basis points more than Treasuries and maintained an estimated payout ratio of 74.6%. Its adjusted U.S. cigarette shipments declined by 4.5% during the second quarter. CEO Sal Mancuso said first-half results showed “steady, disciplined execution.” Altria Investor Relations
Comcast reported the narrowest spread at 62 basis points. The company also posted the lowest estimated payout ratio at 37.6%. Free cash flow in the second quarter totaled $4.6 billion, while pro forma adjusted EPS declined by 4.3%.
Pfizer offered a 6.50% yield and an estimated payout ratio of 57.9%. It posted $15.0 billion in revenue for the quarter, with adjusted earnings per share at $0.77. The company recorded $4.3 billion in non-cash impairments. Chief Executive Albert Bourla said its obesity program had “meaningful momentum.” Pfizer
UPS reported the largest estimated payout ratio at 91.4%. Despite this, the company increased its adjusted EPS outlook to around $7.22 following a $1.76 EPS result in the second quarter. Chief Executive Carol Tomé stated the second half started with “strong momentum.” United Parcel Service, Inc.
Initial estimates for 2026 dividend coverage
| Stock | 2026 EPS estimate | Indicated annual dividend | Estimated payout | Recent operating marker |
|---|---|---|---|---|
| MO | $5.68 | $4.24 | 74.6% | Adjusted cigarette volumes declined 4.5% |
| CMCSA | $3.51 | $1.32 | 37.6% | Free cash flow in Q2 stood at $4.6 billion |
| PFE | $2.97 | $1.72 | 57.9% | Q2 adjusted EPS reported at $0.77 |
| UPS | $7.18 | $6.56 | 91.4% | Guidance for the company lifted to roughly $7.22 |
Payout ratios are calculated by dividing stated annual dividends by the latest 2026 EPS projections from FactSet Research Systems NYSE:FDS. Figures are subject to revision as earnings forecasts are updated.
The referenced article highlighted optimistic outlooks from UBS Group NYSE:UBS, Rosenblatt, and Guggenheim. However, overall analyst sentiment was more cautious. Three stocks received Hold consensus ratings, while UPS had an Overweight rating.
Analyst ratings
| Stock | Consensus | Buy/Overweight | Hold | Underweight/Sell | Average target | Upside from current price | Bull call highlighted by linked article |
|---|---|---|---|---|---|---|---|
| MO | Hold | 4 | 9 | 4 | $70.50 | 3.3% | UBS Buy, $79 |
| CMCSA | Hold | 10 | 17 | 3 | $30.62 | 21.4% | Rosenblatt Buy, $31 |
| PFE | Hold | 9 | 18 | 2 | $28.21 | 6.6% | Guggenheim Buy, $35 |
| UPS | Overweight | 14 | 14 | 4 | $116.24 | 11.9% | UBS Buy, $124 |
FactSet provides the consensus figures and price targets. Upside is calculated based on Friday’s 09:54 EDT share prices.
Of the group, Pfizer demonstrated the most robust combination of Treasury spread and projected payout cover. Comcast offered the largest earnings buffer but the lowest yield premium. UPS called for the highest conviction in a rebound of its earnings. Altria was positioned in the middle, with declining volumes counterbalancing high cash distributions.
Risks: A stronger inflation result might undo the Treasury rally seen on Friday. Additional concerns include tobacco regulation, increased broadband competition, pharmaceutical disappointments, and fluctuations in freight, any of which could outweigh years of dividend earnings.
July consumer price numbers will be released on August 12, followed by producer price data on August 13. The outcome of these reports could influence whether the dividend reprieve seen on Friday endures.
Related articles: NYSE:PFE
