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Surging 30-year Treasury yields revive rate fears for dividend stocks
The 30-year yield hit its highest level since 2007, while Realty Income, D.R. Horton, and Palantir are flagged as potentially exposed to higher financing costs and shifting stock valuation assumptions.
Long-term Treasury yields are rising again, with the 30-year rate recently reaching its highest level since 2007 even after the U.S. Treasury announced expanded long-duration bond buybacks. The buyback plan was intended to relieve pressure on the long end of the bond market, but yields rebounded, underscoring that buybacks alone may not cap borrowing costs, according to MarketBeat Ratings.
While bond yields do not move stock prices directly, the outlet said they affect the assumptions investors use to value equities. When financing costs remain elevated, rate-sensitive companies can be repriced before any visible strain shows up in earnings, with investors focusing first on dividend, growth, and momentum expectations.
MarketBeat Ratings highlighted Realty Income, D.R. Horton, and Palantir as examples that could feel the pressure from higher long-term rates. For Realty Income, which is a REIT required to pay at least 90% of earnings as dividends, the outlet noted the stock’s 5.25% yield and said higher interest rates could make its dividend less competitive if financing costs rise and eventually weigh on earnings.
The outlet added that analysts forecast Realty Income’s earnings to grow about 3.8% over the next 12 months, while the company’s dividend predictability and past share price performance have been key parts of the investment case as the commercial real estate backdrop remains challenging.