Podcast Episode - Suze School: Dividend Paying Stocks vs. Treasuries

We’re switching things up a little on today’s episode is Suze School. Suze starts off with a recap of where things are, right now, in the economy and what effects recent world events have on it. Then Suze explains dividend-paying stocks and Treasuries and why you should consider one over the other.

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Podcast Transcript:

Suze: June 26, 2025. Welcome everybody to the Women and Money podcast, as well as everybody smart enough to listen. Suze O, here and today is going to be Suze School. I know, I know you all miss KT already, but since we missed last Sunday's when everything was going on in the world, I thought today would be better if I did a Suze School and reiterated the things that I really want you to know.

Why did I say reiterated? Because the truth of the matter is we have called it exactly right.

Did I not tell you a little bit ago that the markets would go up and then they would go down? They'd be like a roller coaster, but coming around July 4th, don't be surprised if in fact you see the Standard and Poor's go through its high. The summer should continue, and then we go higher and we'll see how it goes after that. But right now...

I get that the world is just crazy, but look at what the stock market did. It was as if we never attacked those nuclear facilities in Iran. It was as if we weren't worried about oil production.

Oil on the rumor, by the way, that this was going to happen skyrocketed from about $64 to $65 a barrel for crude all the way up to $75 and I would be watching the news and they said, Oh, oil's going to go to $150. Oil's going to go through the roof. Look at everybody, we're having trouble over there. They can close the access to oil. All these things can happen.

And I was like, no, oil is in a down trend. It met its resistance level at about $79, and again, for those of you who don't know, a resistance level is it hits a level that's its highest it's been in a while, and if it goes through that, it will go higher. If it doesn't, it will tend to go down, and I again believe...

Unless they close the Strait, in case they do just something crazy over there, which I just don't think they will do.

I don't think oil is going to go up, and it is in a down trend. Same thing with bonds. I think bonds are very, very weak here, and that's one of the reasons that I wanted to do this Suze School because on my YouTube channel, and are you all watching it by the way, youtube.com/@SuzeOrman...

A week ago I did a video on there—"Just Something Isn't Right with the Economy"—and a few hundred thousand of you watched it, which I like a lot. However, there I talked about rather than bonds, I would like to see you go into dividend paying stocks, and I've been telling all of you now for a very long period of time dividend paying stocks, if you want safety and income...

Even though I understand everybody that dividend paying stocks are not safe if you're comparing them to treasuries, but they also do pay you more, and if you pick your dividend paying stocks correctly, you should be OK. That's what I was saying on the YouTube and all these people wrote, some of them yelling at me saying, Suze, you know dividends aren't guaranteed, blah blah blah blah, as if I don't know things. However, if you pick the right dividends, you should be relatively OK.

A great deal of my money is in dividend paying stocks because I do want income once I stop earning income. I would like to live off of the interest in everything, not my principal. But the interest and the dividend income that my money is earning, also the money I have in bonds, the money I have in municipal bonds...

So I have a lot of money, as you know, in different areas, but all of that money is starting to be geared towards being able to support me in terms of my income needs as I get older and when I'm no longer generating income from my work.

That doesn't mean, however, I want you to take all of your money and put it into dividend paying stocks, because the truth of the matter is the anchor of this bull market really is technology.

You have got to be invested in technology, in semis, in AI. You have got to be because that really is where when you're looking for investments, in my opinion you're looking to invest in where is the future, not where was big money made in the past, where is it going to be made now and in the future, and where is the future going.

And the future is going to artificial intelligence, everybody. There have been so many that I've told you about over the past year or two, and hopefully you've purchased them. You know, starting back in 2024 in October, I told you that I loved Palantir then. I loved Avco or Broadcom, symbol AVGO.

I loved Microsoft, MSFT. All of those I told you that I loved, and so on and so forth, and hopefully you took advantage of them because they are up tremendously, but the three mega caps right now that I do think are going to lead the way are Microsoft, Meta, and NVIDIA, and those are really the top three that hopefully a lot of you have participated in and it's still not too late.

But there's all kinds of ways for you to participate in it. And if you don't want to buy individual stocks, then you can obviously buy an ETF. What has been one of my favorite ETFs in this area that I told all of you about? Symbol SMH. Currently it's at 273. Do you remember when it was down in the low 200s and everything, and somebody wrote into the podcast and how mad they were that they thought it was such a crappy ETF and therefore they want it out at 235.

OK, but I still love that ETF. I think it's absolutely possible it could go to 350 or 400. There are many things out there that you can participate in and hopefully you've taken notes over all the podcasts that I've been doing this. However, participate in whatever way you can. One of my new favorites, by the way, is AMD—symbol. So you might want to look that up.

However, because I do not know your individual situations, and I don't know what you want to do financially, you have to decide and maybe work with a financial professional. Where should you be invested? What should you be doing? Just cause you hear me say these stocks, and I've said many over the past two years, doesn't mean you should just go run out and buy them.

So it's important that you know what your financial goals are, the risks that you could take, and what you want to buy and what you don't feel that you're qualified to buy, just same.

But whatever you're buying, make sure that you do it on a dollar cost averaging basis. All right, do not just go in and put one lump sum in and don't take advantage of it when it goes down because things... they'll always go down and then come back up hopefully if they're good qualities. So think about that.

Bitcoin. I talked about that and I do still like Bitcoin and I get that Bitcoin did not act the way you wanted it to act recently if you've been following it. It went all the way down, you know, to $99,000 recently. I think it's back at about $106,000 or $107,000.

But Bitcoin is not something that's gonna go up like gold when we go to war or there's things that we're in conflict. Bitcoin is not like that. It actually, if you watch it, doesn't hold up when things are not good, but it does eventually come back, and I still think that in the long run, everybody—and I don't know when that will be—I don't think you should be surprised to see it at $150,000 or $170,000 again.

I know so many of you get mad at me when I talk about it. Too many things are just going in that way, including certain things that the government has just done with Stablecoins and maybe we'll do a podcast on that, but it's just something that I don't think it's a bad idea to have a little bit, especially if you can afford to lose it. Gold... haven't been that pleased with gold, but I still would hold a little bit of it.

I wanted it to react a little better, especially with the happenings of last week. It didn't, but doesn't mean that we should just hold on to a little bit, but overall...

Everything is doing exactly what we've said it would be doing. Real estate is starting to go down a little bit. It's having a little bit of a hard time here. So if you're a buyer, I would just hold on for a little. And if you're a seller, I would not be that stuck on your price at this point in time.

So those are the things that we've already talked about, you're up to date on now, but you should not be freaking out. Do not freak out. The markets are showing you that they're stronger than things that are happening outside like Iran and what's happening with Gaza and Israel and everything. It's like they have a mind of their own right now. That's not to say if something dramatic happened in the United States or whatever, they won't respond.

They're strong right now, so hopefully you are taking advantage of that.

Now what I wanted to talk to you about Suze School today is and you need to really take out your notebooks for this one, OK? I want to clarify why on the YouTube video that I made, and you might all want to go and take a look at it...

Why I was talking about I'd rather see you go into dividend paying stocks than bonds, and again the reason is I just think bonds are weak, and I think that dividend paying stocks can actually give you more income per year than bonds. Did you hear what I said?

Now I understand very well that stocks go up and down in value. But if you select, like I said, good quality dividend paying stocks that pay a dividend and that have been pretty consistent with raising their dividends or paying a dividend over a long period of time—that doesn't mean that in certain years they didn't stop paying a dividend but they came back and continued to pay and everything—that not only can you get income, but in certain markets you could also see those stocks go up in value as well.

So here's what I want you to understand about a dividend. Not all stocks pay a dividend. But many stocks do. What is a dividend? A dividend is the company that you're purchasing, the stock company, decides on an amount of money per share that usually every quarter—so they divide it by 4—if they're going to give you $2 a share, every quarter, every 3 months, they pay you 50 cents per share.

So that dividend can go up every year. The dividend can go down, and the company, if it gets in trouble, they can also absolutely delete the dividend altogether—stop paying it. So those are things that you need to know about dividend paying stocks. When a dividend is paid, however, you do not pay tax on it the way you pay tax, let's say, on a Treasury bill, bond, or note.

When you get interest from a treasury note—let's say it's a 10-year Treasury note—you pay ordinary income tax on that interest, and you pay it on your federal level. You obviously do not pay any tax on it on the state level. But you do pay ordinary income tax on the federal level.

On dividend stocks—now listen to me closely—on dividend stocks, the majority of them pay what's called a qualified dividend. And a qualified dividend simply means it's been paid out by a legitimate corporation that you've held for at least 60 days before it pays its dividend and after it paid its dividends. So then the dividend is qualified. And what is it qualified for? It's qualified to be taxed as a capital gain.

Did you hear me? It's taxed as a capital gain versus ordinary income. Now you may think, hey, what difference does that make to me? In a second I'm going to show you exactly how much of a difference it can be.

Now I went through some of the dividend paying stocks that I personally own and I picked out 7 of them that paid a dividend of 3.90% or higher. I have many dividend stocks that pay 2%, that pay 1%, whatever it may be, but let's say you were out there and you wanted to replace the income from a treasury with dividend paying stocks. A 10-year treasury is paying, let's just say about 4.3%.

And you wanted to replace that income. You just wanted to see, could it be done? So I picked out seven of my stocks that pay a 3.9% yield or above.

And these are the 7. I'm not saying you should buy them. Sometimes there's risks in everything, but I'm just giving you an example.

The first one is AbbVie, symbol ABBV. Second one, and I've told you I like the stock, AT&T, symbol T. Prudential Financial, symbol PRU. Fifth Third Bancorp, symbol FITB. Another stock by the name of Sanofi, symbol SNY. Williams Companies, symbol WMB. And Amcor, symbol AMCR.

Now I'm not going to go into what all these stocks do and everything about them, but here's what I can tell you about them. First of all, when you're looking for a good dividend paying stock, you want to make sure that the company is making enough money—it's called free cash flow, money that isn't committed anywhere—but they have enough free cash flow to cover the dividend.

That's the first thing you really want to look at. All of them have essentially strong cash flow. AT&T, it's adequate. And really Amcor is adequate, but all the others really have strong cash flows. Also, most of them have increased their dividends every single year for many, many years. There are some of these that in 2022, for instance—I think it was AT&T—cut off their dividend for a little bit. Also AbbVie was a spinoff, and they have been increasing and paying their dividends since 2013.

So there's all little nuances with these seven companies, but all of them, in my opinion, are absolutely relatively safe.

Now, let's do a hypothetical situation. Let's assume, OK, that you have $100,000 to invest. And you live in the state of California and you are married and make $200,000 between the two of you. Let's just assume that is true.

And you decide that you want to see the difference between if you were to invest $14,000-some-odd dollars in equal amount of money in each one of these seven dividend paying stocks versus if you took the money and bought, let's say, a 10-year treasury note at 4.3%.

OK. What would that look like?

Here's what it would look like after one year. Now this assumes that over these 10 years, the dividends kind of stay the same, they never increase. And that everything just with the dividends remains equal and that obviously the income on your treasury is equal as well.

So here's what we have. You have invested $14,285 in each one of these, and if you do so, your annual average dividend then would be 5.69%. So after—write this down, everybody—after one year you would have earned $5,685.72 in dividends.

Now, because these are qualified dividends, meaning you pay it in the capital gains tax rate, you would only be paying on these dividends—on this $5,685—you would pay to the feds $853, OK, but to the state of California, remember you're a California resident, so I'm making this really the most fair comparison I can. Cause if you didn't live in a state that had taxes, you would have just paid $853 on these dividends, and that would have been it. However, we're assuming you live in the state of California. And you will owe $528 in taxes on these dividends for a total of $1,381. That means that after all taxes are paid, you will have put in your pocket $4,304 for you to pay your bills. That's a 4.3% after-tax return on your money.

Now let's look at the 10-year treasury, giving you 4.3%. Obviously at the end of the first year you will have been paid out $4,300 and again because it's ordinary income taxes and you make $200,000 a year jointly, you're in the 24% tax bracket—that's $1,032 in income tax. Because this is a treasury, you don't pay California anything, so there's no state tax. So your total tax bill was $1,032. So after taxes you actually have $3,268 to spend on your expenses. That's a 3.27% yield.

So, one, the dividends are giving you $4,304 after taxes. The treasury is giving you $3,268 after taxes. That's a big deal, especially if you look out 10 years.

Again, let's just assume everything stays the same. After 10 years you have $43,040 of after-tax income to do whatever you want with. On the treasury, you have only $32,680 that it has paid out to you after tax. That's a difference of $10,360 or almost 10% of your original investment. Now why is that important?

Yes, I know a lot of you are afraid of dividend paying stocks, but there are many of these stocks that if you actually look at the growth over the past 5 or 10 years, you would have made money on many of them as well. Some of them actually went up in value. Some of them went down, and you would not have lost out. Now there is no way that I can guarantee, whether it's these stocks or any dividend paying stock, as to what is going to happen.

But if you pick your dividend paying stocks correctly, and they're giving you a nice dividend—not too high of a dividend. I'm not asking you to go out there and look at a dividend that's paying you 18%, 11%—just ordinary interest, ordinary ranges of income like these stocks go from 3.9% to 6.1% to 4.5% to 3.89% to 8.75% to 5.00% to 8%.

So they're all in the range there, but you don't see any at 11, 12, 13, or 15. OK, so don't look at how high the yield is. You need to look at how safe the yield is, and one way you look at that is through free cash flow. Now this may seem difficult, but really it is not.

But dividend paying stocks are a great alternative, especially when bonds are kind of weak, and you know you just might need more income than what treasuries are paying. And again, look at what you get after taxes. That is what really matters, and to be taxed on a qualified dividend as a capital gain versus on a treasury ordinary income, that is a very, very big deal.

Also, I just want to say many stocks raise their dividends every single year. So unlike a treasury where you would be locked in at that 4.3% for all those 10 years and if interest rates went up, the value of that treasury would go down, so you wouldn't be able to sell it. And obviously the reverse is true—if interest rates went down, the value would go up, but you wouldn't want to sell it because then where would you get 4.3% again?

Just something to think about, but in good quality dividend paying stocks, it is not unlikely that the dividend is either raised every year or every few years, so your income could absolutely go up.

And to those people who say, but what happens when the stock goes down? If stocks are going down, at least you're being paid to wait until they do come back up. What you care about isn't the price of the stock. You care about the income that it is paying you in the form of a dividend.

So should all of your money be doing this? No. Again, as I started with, I want to see some of your money in AI and technology and semis and all these things. Absolutely I want you there.

However, if you have money right now and you're kind of deciding, do I do more treasuries, what do I do right now? I don't like how bonds are responding. All right, everybody, I'm telling you—you might want to look into good quality dividend paying stocks.

All right, that is your Suze School for today. So again, I do want you to also take a look at youtube.com/@SuzeOrman, see what we have going on there. I will be making a new video, so I'm sure it will be up either today or tomorrow, but it's something that you could use in combination with the Suze School and of course nothing replaces Ask KT and Suze Anything which will be this Sunday, by the way, cause I know many of you cannot do without KT.

And I really understand that very well. All right, so until Sunday there's really only one thing that I want you to remember, and it is this: people first, then money, then things. Now you stay safe.