Dividend ETFs vs Treasuries flipped on September 24, 2026: the 10-year Treasury par yield closed at 5.18%, up from 4.96% two sessions earlier. That beats SPYD’s 4.60% 30-day SEC yield, SCHD’s 3.26% and DGRO’s 1.95%. No large US dividend ETF currently out-yields the risk-free note. The gap only closes through dividend growth and tax treatment.
What happened to Treasury yields on September 24, 2026?
The long end broke out. The Treasury Department’s daily par yield curve put the 10-year at 5.18% on September 24, 2026, against 5.11% on September 23 and 4.96% on September 22 — 22 basis points in two sessions. The 30-year hit 5.47%, the 5-year 5.03%, the 2-year 4.87%.
The catalyst was data, not the Fed. Wolf Street reported the 10-year spiked 13 basis points on September 23 to its highest close since June 2007, after the S&P Global US Composite Flash PMI showed output growing at the fastest rate in over five years and input costs at their steepest in four years.
Supply confirmed it. The September 23 auction of $80 billion in 5-year notes cleared at 5.033% — the highest 5-year auction yield since before 2006, per the same report.
Context: the FOMC raised the federal funds target range to 3.75%–4.00% on September 16, 2026. The move at the long end since then is a term-premium and inflation story, not a policy-rate story.
Which dividend ETF yields the most right now?
SPYD, the SPDR Portfolio S&P 500 High Dividend ETF, leads the large US dividend funds at a 4.60% 30-day SEC yield as of September 23, 2026, according to State Street’s fund page. Its distribution yield is 4.44%. SCHD is next at 3.26%. The S&P 500 itself yields roughly 1.05%.
One technical point most comparisons get wrong: the 30-day SEC yield is already net of the fund’s expense ratio. You do not subtract the fee again from the quoted yield.
The fee still matters — it drags total return, not just income — but the yield gap against Treasuries is not a fee artifact.
The four funds that dominate the category
- SPYD — highest yield, 78 holdings, smallest asset base at $7.21 billion (September 23, 2026).
- SCHD — largest at $109.45 billion (September 23, 2026), 102 holdings, quality screens on the Dow Jones U.S. Dividend 100 Index.
- VYM — cheapest at 0.04%, the broadest at 605 stocks, $78.99 billion as of June 30, 2026.
- DGRO — growth-of-dividends screen, so the lowest current yield at 1.95%, 389 holdings, $42.64 billion.
Do dividend ETFs beat Treasuries on yield today?
No. On current yield alone, the 10-year Treasury at 5.18% beats every one of them. SPYD comes closest and still trails by 58 basis points. SCHD trails by 192. DGRO trails by 323. A buyer of the note locks that 5.18% coupon for a decade; a dividend ETF holder does not lock anything.
| Instrument | Expense ratio | Current yield | As of | Assets | Holdings |
|---|---|---|---|---|---|
| 10-year Treasury note | 0.00% | 5.18% (par yield) | Sep 24, 2026 | n/a | 1 |
| SPYD | 0.07% | 4.60% (30-day SEC) | Sep 23, 2026 | $7.21B | 78 |
| SCHD | 0.06% | 3.26% (30-day SEC) | Sep 22, 2026 | $109.45B | 102 |
| VYM | 0.04% | 2.40% (equity yield) | Jun 30, 2026 | $78.99B | 605 |
| DGRO | 0.08% | 1.95% (30-day SEC) | Aug 31, 2026 | $42.64B | 389 |
| S&P 500 index | — | 1.05% | Sep 23, 2026 | n/a | 500 |
VYM’s figure is an equity dividend yield from its June 30, 2026 fact sheet, not a 30-day SEC yield, so it is not strictly comparable to the others. Vanguard cut VYM’s expense ratio from 0.06% to 0.04% effective February 1, 2026, part of a reduction across 84 share classes in 53 funds the firm said would return nearly $250 million to investors in 2026.
How much does each fund cost on a $10,000 position?
Almost nothing, and that is the point — fees are no longer the deciding variable in this comparison. At current expense ratios, a $10,000 position costs between $4 and $8 a year. The 58-basis-point yield gap between SPYD and the 10-year is worth $58 on the same $10,000, roughly eight times the fee spread.
The arithmetic, annualized on $10,000:
- VYM at 0.04%: $10,000 × 0.0004 = $4.00
- SCHD at 0.06%: $10,000 × 0.0006 = $6.00
- SPYD at 0.07%: $10,000 × 0.0007 = $7.00
- DGRO at 0.08%: $10,000 × 0.0008 = $8.00
- 10-year note bought at auction and held: $0.00
Widest fee gap in the group: $4 a year. Yield gap to the Treasury: $58 for the best fund, $323 for the worst.
That inverts the usual Wealth Engine conclusion. In our T-bills versus money market funds comparison, the fee was the whole story. Here it is a rounding error.
How fast would dividends have to grow to close the gap?
About 2.7% a year. SPYD needs its distribution to grow enough that the average yield-on-cost over ten years reaches 5.18% from a 4.60% start. That ratio is 5.18 ÷ 4.60 = 1.126, and a growth rate of roughly 2.7% produces an average multiple of 1.131 across ten payments.
The check: at 2.7% growth, the sum of (1.027)^t for t = 0 through 9 is 11.31; over ten payment years that averages 1.131, just above the 1.126 required.
That is a modest hurdle historically, but it is not guaranteed and it ignores price risk. The Treasury buyer’s 5.18% is contractual; SPYD’s 4.60% is a 30-day snapshot.
Dividend cuts are the asymmetry. A note paying 5.18% and returning par cannot pay 3% instead. An ETF whose companies cut payouts in a downturn can.
Which wins after tax?
Treasuries, for most taxable investors in high-tax states — and by more than the headline gap suggests. TreasuryDirect states that Treasury note interest carries “Federal tax due each year on interest earned” but “No state or local taxes.” Qualified dividends get a lower federal rate but no state exemption.
Worked example, $10,000, 24% federal marginal rate, 5% state rate. For SPYD we assume 75% of distributions are qualified and 25% are REIT ordinary income, reflecting its 24.64% real estate weight — an illustration, not a reported figure.
| Line | 10-year Treasury (5.18%) | SPYD (4.60%) |
|---|---|---|
| Gross annual income | $518.00 | $460.00 |
| Federal tax | $124.32 (24%) | $51.75 on $345 qualified at 15% + $27.60 on $115 ordinary at 24% |
| State tax (5%) | $0.00 (exempt) | $23.00 |
| Net income | $393.68 | $357.65 |
| Effective after-tax yield | 3.94% | 3.58% |
The pre-tax gap of 58 basis points narrows to 36 after tax: $393.68 versus $357.65 is a $36.03 difference on $10,000. The dividend’s lower federal rate partly offsets the Treasury’s state exemption, but it does not erase it.
For an investor in a no-income-tax state the after-tax gap narrows further, to roughly $13 on $10,000. Inside an IRA or Roth, tax drops out entirely and the gap is the full 58 basis points. Section 199A may reduce the tax on the REIT portion further, which would narrow the dividend side again.
See also our TIPS versus Treasuries breakeven analysis for how inflation expectations change the nominal note’s real payout.
Is SPYD’s 4.60% yield a trap?
It carries a specific structural risk: the fund that comes closest to matching the Treasury yield is also the one most damaged by the yields rising. State Street’s sector data as of September 23, 2026 shows SPYD at 24.64% real estate and 10.58% utilities — 35.2% in the two most rate-sensitive sectors in the index.
That is not a coincidence. Screening the S&P 500 purely for high yield concentrates you in bond-proxy sectors whose valuations compress as the discount rate rises.
Its top holdings read the same way: Alexandria Real Estate at 1.41%, AT&T at 1.49%, Verizon at 1.42%.
The concentration math
SPYD holds 78 stocks against SCHD’s 102 and VYM’s 605. Fewer names, heavier tilt, higher headline yield. You pay for that yield in concentration, not in fees.
Our XLF versus KRE breakdown covers the same trade-off inside financials.
Which option fits which investor?
It depends on one variable: whether you need the income locked or growing. A ten-year note locks it. A dividend ETF grows it, unreliably, while exposing principal to equity drawdowns.
| Investor goal | Better on measurable attributes | Why |
|---|---|---|
| Fixed income for a known 10-year liability | 10-year Treasury | 5.18% contractual, par at maturity, no expense ratio |
| Maximum current yield from equities | SPYD | 4.60% 30-day SEC yield, highest in the group |
| Lowest holding cost | VYM | 0.04% expense ratio, $4 per $10,000 per year |
| Rising income over a decade | DGRO or SCHD | Growth screens; 1.95% and 3.26% starting yields |
| Taxable account in a high-tax state | 10-year Treasury | State and local tax exemption on interest |
| Tax-sheltered account | Equity funds on total-return grounds | Tax treatment is neutral; only gross returns matter |
| Avoiding rate-sensitive sector concentration | VYM | 605 holdings versus SPYD’s 78 |
For the duration question on the Treasury side, our TLT versus SGOV comparison quantifies what ten to fifteen years of duration risk costs when yields keep climbing.
Frequently asked questions
Does any dividend ETF yield more than the 10-year Treasury right now?
Not among the large diversified US dividend funds. As of September 24, 2026, the 10-year par yield was 5.18%; the highest of the four funds here was SPYD at 4.60% as of September 23, 2026. Narrower or leveraged income products may quote higher yields with different risks.
Is the 30-day SEC yield before or after fees?
After. It is calculated net of the fund’s expense ratio, so you should not subtract the expense ratio again from a quoted SEC yield.
Why is SCHD’s SEC yield higher than its trailing dividend yield?
SCHD shows a 3.26% 30-day SEC yield as of September 22, 2026 and a 3.00% trailing 12-month dividend yield as of August 31, 2026. The SEC yield reflects the most recent 30 days of income annualized; the trailing figure looks back a full year.
Do I pay state tax on Treasury interest?
No. TreasuryDirect states that Treasury notes carry no state or local taxes, though federal tax is due each year on interest earned.
What happens to dividend ETFs if yields keep rising?
Rate-sensitive sectors typically face valuation pressure. SPYD’s 24.64% real estate and 10.58% utilities weights as of September 23, 2026 make it more exposed than VYM’s 605-stock portfolio.
Is the 10-year yield the highest it has been in 19 years?
The September 23 close of 5.10% reported by Wolf Street was the highest since June 2007. The Treasury’s par yield series put the 10-year at 5.18% on September 24, 2026.
Which of these funds is cheapest?
VYM at 0.04%, after Vanguard’s cut from 0.06% effective February 1, 2026. SCHD is 0.06%, SPYD 0.07% and DGRO 0.08%.
The bottom line
As of September 24, 2026, the 10-year Treasury at 5.18% out-yields every large US dividend ETF, and it does so with no expense ratio, no credit risk and no dividend-cut risk. On current yield, the risk-free asset wins outright.
The decision turns on exactly two things. First, whether you need income that is locked or income that can grow — SPYD needs roughly 2.7% annual distribution growth over ten years just to average the note’s 5.18%. Second, your tax situation: the Treasury’s state-tax exemption is worth about 36 basis points a year against SPYD for a 24%-federal, 5%-state investor, and nothing at all inside an IRA.
The skeptical note is about how SPYD earns its 4.60%. Concentrating 35.2% of the portfolio in real estate and utilities to reach that yield means the fund is most exposed to the very thing that made Treasuries competitive. The highest equity yield in the group is the one built out of the assets rising rates hurt most.
This article is journalism, not investment advice. Do your own research before investing.
Sources
- U.S. Department of the Treasury — Daily Treasury Par Yield Curve Rates, September 2026
- State Street — SPDR Portfolio S&P 500 High Dividend ETF (SPYD) fund page
- Schwab Asset Management — Schwab U.S. Dividend Equity ETF (SCHD)
- iShares — Core Dividend Growth ETF (DGRO)
- Vanguard — Vanguard lowers expense ratios
- TreasuryDirect — Treasury Notes
- Wolf Street — 10-year Treasury yield spikes to 5.10% after hot PMIs, September 23, 2026
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