The 10-year Treasury note is hovering right around a yield of 4% -- the highest level in 10 years. A high risk-free rate means that there is an opportunity cost associated with investing in stocks. The S&P 500 returns around 10% per year (when including dividend reinvestment), but that average includes many down years, flat years, or poor-performing years. Investors looking for a sure bet of 4% rather than dealing with the ebbs and flows of the stock market are favoring Treasury notes over stocks -- a big reason why equity prices are under pressure.

One way of getting the best of both worlds is to find quality high-yield dividend stocks that give you a 4% or higher yield while keeping you invested in the stock market. Phillips 66 (PSX 0.09%) Southern Company (SO -0.52%), and Mativ Holdings (MATV 0.47%) are three high-yield dividend stocks worth considering now, according to three Motley Fool contributors. Here's why.

A person stacks stones in increasingly taller towers.

Image source: Getty Images.

Get your high-yield kicks with Phillips 66

Scott Levine (Phillips 66): Offering investors the chance to energize their passive income streams with a forward-yielding dividend of 4.2%, Phillips 66 is an oil and gas company that owns and/or operates various assets across the value chain. In addition to its midstream business, which includes 22,000 miles of pipeline across the United States, Phillips 66 manufactures petrochemicals and plastics at 28 facilities worldwide. Regarding its downstream business, Phillips 66 refines crude oil and other feedstocks at 12 refineries in the U.S. and Europe.

Smart investors recognize that while a high-yield dividend stock is excellent, it means little if the company can't sustain its payout to shareholders. This concern, however, is not so applicable. Management is keenly aware of the importance of reinvesting in the business to ensure growth -- and positioning it to continue rewarding shareholders without jeopardizing its financial health. On the company's fourth-quarter 2021 conference call, for example, Kevin Mitchell, the company's CFO, stated that the company's capital allocation framework targets a 60% reinvestment in the business and a 40% return of capital to shareholders in the forms of dividends and stock buybacks.

Demonstrating its commitment to reinvesting in the business, Phillips 66 announced in January that it's acquiring the outstanding units of DCP Midstream for cash consideration of $3.8 billion. According to Phillips 66, the acquisition of the natural gas company will result in an incremental gain of $1 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

It's not only income investors these days who will be interested in fueling their passive income stream with Phillips 66 -- value investors will also find the stock compelling. Currently, shares of Phillips 66 are trading at 6.7 times forward earnings, a steep discount to their five-year average forward earnings multiple of 16.2.

A balanced utility stock for risk-averse investors

Daniel Foelber (Southern Company): Utilities have been one of the worst-performing sectors in the S&P 500 year to date. The sector is down 7.8% and Southern Company -- one of the largest regulated electric utilities in the U.S. -- saw its stock tumble 9.6%. The sell-off, combined with a sizable dividend, has pushed the stock's yield up to 4.2%, slightly higher than a 10-year Treasury note.

Southern Company is an attractive dividend stock for a number of reasons. The company has sustained or raised its dividend for over 70 years -- making it an incredibly reliable passive income source no matter what the economy or stock market is doing.

Southern Company serves over 9 million customers, mainly in Alabama, Mississippi, and Georgia. It has seven core electric and natural gas utilities, including regulated electric services, wholesale electric power, and a large nuclear energy business. 

Compared to other regulated electric utilities like NextEra Energy, for example, Southern Company isn't investing as rapidly in solar and wind energy. But it still has 12.5 gigawatts (GW) of wholesale solar, wind, natural gas, and clean energy across 14 states -- mainly California and Texas.

A good way to think about Southern Company is distinguishing between its sizable swath of services in its three core states, and its wholesale renewable energy and infrastructure sites.

Southern Company's strength is that it is a reliable and safe dividend stock. It isn't going to hit it out of the park with its growth rate. And in many ways, it's more conservative than its peers. But for passive-income-minded investors who favor a utility that is steadily investing across the energy mix instead of mainly in solar and wind energy, Southern Company could be worth a look.

A challenging year ahead, but Mativ can muddle through 

Lee Samaha (Mativ Holdings): Mativ is a creation of the merger between Schweitzer-Maudit and Neenah in 2022. The rationale behind the merger is relatively simple to understand. The two were relatively small companies looking to accelerate their growth rates by buying specialty materials and paper companies. In doing so, they would move their revenue away from lower-growth end markets like tobacco papers.

With this history, it made sense to take the mergers and acquisitions activity to the next level and merge the two companies to generate significant cost synergy from the deal. Management continues to plan for $65 million in cost synergies overall, with a run rate of half that amount by the middle of 2023. Turning to the financial guidance for 2023, CFO Andrew Wamser said on the recent earnings call, "[W]e think it's fair to say that the full year 2023 consensus EBITDA estimate of nearly $390 million appears reasonable."

EBITDA is a standard measure of earnings. The Wall Street consensus for EBITDA in 2023 is actually $386 million with earnings per share of $2.54 -- more than enough to cover the $1.60 dividend per share. 

The numbers look attractive, but Mativ will have to navigate an uncertain end-market environment with industrial customers de-stocking as their end demand slows. In addition, many of their customers previously built up inventory to get ahead of supply chain difficulties. Meanwhile, competitor 3M has given a lackluster outlook for 2023. 

All told, Mativ faces a combination of end market headwinds and earnings tailwinds from merger synergies. Nevertheless, if it can muddle through in 2023, investors could enjoy a high-yield stock with decent growth prospects in the coming years.