NEW YORK ( TheStreet) -- The 10-year treasury note has long been a safe haven for investors in times of doubt about the economy, but in doing so, they may be missing out on better-yielding opportunities found in consumer goods stocks.

Granted, just about every security out there holds higher upside than the 10-year treasury. But these following stocks are also generally as safe, if not safer, than that note.

There may be a bit more risk, for example, in Altria's ( MO) case -- but it's definitely well worth considering as a dividend play. Altria's total shareholder return has outperformed the S&P 500 every year since 2000 and has increased its dividend 43 times in the last 41 years.

Meanwhile, P&G ( PG) has been paying a dividend for 120 consecutive years since its incorporation in 1890. Its April 19 declaration of a 9.5% dividend increase marks the 54th consecutive year that the company has increased its dividend.

As for J&J ( JNJ), "strong cash generation has enabled the firm to increase its dividend for the past 45 years and we expect this to continue," Morningstar analyst Damien Conover said in a recent research report.

Worth noting is that Frank Ingarra, co-portfolio manager at Hennessy Funds, recently wrote in a report that he firmly believes companies will increase or initiate dividends. "I have said for some time that dividend investing will be the story to watch and it is unfolding now ... this lower growth environment provides a great opportunity for companies to increase dividends in order to try and drive their underlying stock prices higher."

So how does each stock we're looking at stack up to the ten-year treasury note? Read on to find out....


J&J's (JNJ) Forward Annual Dividend Yield: 3.7%

10-Year Note Yield: 2.986%

What Analysts Say About the Stock's Dividend: Morningstar analyst Damien Conover tells TheStreet that investing in J&J, "makes sense ... in return, not only do you have a high dividend yield, but you also an opportunity for capital appreciation where there's significant upside," which is one of the key differentials between J&J stock and the 10-year treasury.

"It's also a comfort to know that it is well-regarded from a credit standpoint," he said.

Furthermore, In JNJ's case, "the bulk of the patent cliff is behind it -- vs. the rest of the industry, which is almost on other side of it."

Conover tells TheStreet that the stock's main risk relative to the treasury is that it could potentially trade lower.

Damien Conover's Morningstar Report on J&J's Financial Health: "Johnson & Johnson carries one of the best balance sheets in the pharmaceutical industry and holds the coveted AAA credit rating that eludes its peers. Even with the likely small- and mid-cap acquisitions over the next several years, we don't expect any deterioration to the company's solid financial position."

Furthermore, "Johnson & Johnson's products carry average operating margins in the mid-20s. We expect new drugs and cost-control efforts to counter slight downward pressure on margins as the company loses patents on high-margin pharmaceuticals."


Altria's Forward Annual Dividend Yield: 6.9%

10-Year Note Yield: 2.986%

What Analysts Say About the Stock's Dividend: "Altria is yielding 6.9% and that's a nice yield," Morningstar analyst Philip Gorham tells TheStreet. "We think there's 15% upside to the stock too."

"Altria's got strong, stable free cash flows," Gorham adds, "so we think that yield is sustainable."

Still, Gorham notes that the tobacco industry is in decline and raises concerns about the possibility of dividend cuts due to the potential impact of heavy litigation penalties. "Regulations ... could really hurt their cash flows ... but if investors could withstand the risks, Altria is a good buy-and-hold stock," he tells TheStreet.

Philip Gorham's Morningstar Report on Altria's Financial Health: "Although Altria's debt/capital ratio of 0.7 is higher than its peers, the company looks healthier from a cash-flow perspective. We forecast its EBITDA to cover interest expense by almost 8 times during the next ten years. Nevertheless, the size of Altria's debt and the high coupon of some of its outstanding bonds weigh on the company's credit worthiness. Its cash flow cushion is 2.2."

In his report, Gorham added that "the U.S. Supreme Court upheld a federal judge's ruling that although the tobacco industry illegally collaborated to conceal the dangers of cigarettes, the government cannot extract the $280 billion it was seeking in past profits, or the $14 billion it was seeking from the industry to fund an antismoking campaign. The tobacco industry can now breathe a sigh of relief after the Supreme Court's ruling, because the potential payout could have put a material dent in their free cash flow for many years to come. Nevertheless, the industry still faces significant litigation risk."


P&G's Forward Annual Dividend Yield: 3.2%

10-Year Note Yield: 2.986%

What Analysts Say About the Stock's Dividend: "I would definitely agree that P&G offers a better value," vs. the 10-year note, Morningstar analyst Lauren DeSanto tells TheStreet. "Currently P&G yields a 3.2% dividend so investors can enjoy a yield better than the 10-year as they wait for the stock to appreciate. Based on where I value the stock P&G should deliver another 9% to 10% annual return over the next three years." DeSanto adds that the company has increased its dividend by an average of 9.5% annually for more than 50 years and Morningstar gives it a AA credit rating.

"There are risks facing P&G -- i.e. input cost inflation, negative foreign exchange translation, and consumer trade-down, to name a few," says DeSanto. "But I don't see any risks to the dividends by any means, and it's certainly not a particularly risky investment compared to the 10-year," she said. "P&G stock also offers better inflation protection than the 10-year by far."

DeSanto on P&G's Financial Health: "Fiscal prudence remains a priority for P&G. The firm has an impeccable credit rating, generated almost $15 billion in cash from operations in 2009, and has an interest coverage ratio of more than 11 times earnings before interest and taxes."

"P&G throws off a ton of cash, but returns on invested capital, while still exceeding the firm's cost of capital, have taken a beating during the last year. Efforts to improve efficiency should help, and opportunities for modest gross margin improvement still exist."
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-- Written by Andrea Tse in New York


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