With the onset of COVID-19 and its devastating economic aftereffects, U.S. Treasury yields have fallen dramatically. For instance, the 10-year yield is well below 1%. This makes it tough for yield-seeking investors, since other fixed-income instruments have their yields based on the risk-free Treasury.

So, with bonds paying low yields, one alternative is to look for a reliable dividend payer. Blue chip Walmart (WMT 0.08%) fits the bill.

Roll of cash next to sign that says Dividends.

Image source: Getty Images.

Strong dividend commitment

Walmart has increased its dividend every year since making its first payment in 1974. This includes some tough periods like the stagflation of the 1970s, the recession in the early 1990s, and the last decade's Great Recession. Of course, it also raised April's payment by a penny to $0.54 when other companies were lowering or suspending their dividends due to the uncertainty created by the pandemic. This impressive track record makes it a Dividend Aristocrat, a member of the S&P 500 that has raised its dividend for at least 25 consecutive years.

In a few years, it will likely join an even more illustrious group when it becomes a Dividend King. This consists of companies in the index that have increased payments for half a century straight at a minimum.

Besides this unwavering commitment to rewarding shareholders, it has the cash flow to back up its payout. In the first half of fiscal 2021, which ended on July 31, Walmart's free cash flow (operating cash flow minus capital expenditures) was $15.4 billion. This left plenty to pay the $3.1 billion of dividends.

Currently paying $0.54 per quarter, Walmart's dividend yield is 1.6%.

Upside potential

While this yield is more than two times what the 10-year Treasury pays, you also have the potential to participate in the stock's upside. Squeezing costs and passing these savings along to customers via low prices has made Walmart into a powerhouse that serves 265 million customers worldwide.

Showing its appeal during the pandemic and the economic fallout it caused, its second-quarter adjusted revenue, which removes the effects of foreign currency exchange translations, grew by 7.5% to $140.2 billion.

While the company has been operating discount stores for nearly 60 years and has become the world's largest retailer by revenue, it is not resting on its laurels.

Walmart continues to push its e-commerce initiatives, and it is taking on Amazon (AMZN -1.54%). This includes launching its own subscription service, Walmart+, earlier this month. Charging $98 a year, it offers free delivery, an app that allows faster checkout in the store, and discounts on gas.

Low prices always appeal to shoppers, particularly during tough economic times. When you add in a faster, more convenient shopping experience, that just boosts Walmart's allure.

With puny yields on governmental bonds, this Dividend Aristocrat makes a lot of sense for income-seeking investors. Certainly, an equity investment has more risk than a U.S. government bond. However, Walmart is a large, well-established company that has raised its dividend for almost 50 years. On top of that, shareholders have the opportunity for capital appreciation. That is a compelling case.