$10,000 in 10-Year Treasuries vs. $10,000 in SCHD -- Which Pays More Passive Income By 2036?
2026-10-08 11:15
•Matt Dilallo •The Motley Fool
••• • Axe Cap view
Treasuries vs Dividend ETFs: Which Earns More by 2036?
U.S. 10-year bonds offer strong yield now, but dividend growth in stocks can catch up over time.
Right now, 10-year U.S. Treasuries yield about 5.3%, the best in decades, giving a very reliable $530 annual payout on a $10,000 investment. That’s hard to beat for pure income security. On the other hand, dividend ETFs like SCHD start lower at 3%, but historically their dividends grow around 10% a year. Assuming history holds, SCHD could surpass Treasury income around year seven and yield over $700 annually by 2036. For South African investors, the question hinges on rand-USD prospects and income needs. If the rand weakens, U.S. dividend income grows in rand terms, which helps JSE investors owning foreign assets. Domestically, we're better placed with banks like Standard Bank or Sanlam that blend dividend yield and growth amid a tough local economy. The risk is that dividend growth may stall or the rand moves unpredictably, altering returns. Don't expect a smooth ride either way. this is just our opinion and not financial advice
For now, keep a foot in both camps: hold some rand-hedged local high dividend payers like FirstRand and selectively add U.S. dividend ETFs like SCHD to tap growth potential, but don’t abandon high-yield bonds entirely given their income certainty.
- USD/ZAR
- SCHD
- Dividend growth disappoints
- Rand volatility eats into foreign returns
6/10
The article compares two income-generating investments: 10-year Treasury bonds currently yielding 5.3% (the highest in 24 years) and the Schwab U.S. Dividend Equity ETF (SCHD) with a 3% yield. While Treasuries provide guaranteed $530 annual income, SCHD's historically 10% annual dividend growth could surpass Treasury income by year seven and generate over $700 annually by 2036. However, Treasuries deliver more cumulative income over the decade, while SCHD offers potential for continued growth after maturity.
Our take is based on reporting first published by The Motley Fool.