High bond yields have been a boon for income investors. However, they may be missing out if they are bypassing dividend stocks altogether, according to Neuberger Berman senior portfolio manager Sandy Pomeroy, who manages the Neuberger Berman Equity Income Fund (NBHAX) . “Dividend stocks grow their dividends, where Treasurys you get one coupon, you have the coupon for the duration of the bond and that’s it,” Pomeroy said in an interview on ” Squawk on the Street ” Friday. “So, if you think about what a bond that’s yielding 4% can give you over a five-year period, if you can find a dividend stock that’s paying 3% and is growing their dividend at 10%, you’re going to end up ahead over a five-year period of time,” Pomeroy said. In addition, companies also have pricing power amid inflation, she added. The 5-year Treasury is currently yielding about 4.36%, while the 10-year has a 4.23% yield. Then there is the potential appreciation of the underlying equity. Right now, dividend stocks haven’t been this cheap since the tech boom of the 1990s, Pomeroy said. “They went on to have a great decade. They were the outperformers for the next 10 years and that could happen again, in our mind,” she said. Dividend stocks have underperformed this year: The SPDR S & P Dividend ETF (SPYD) has a total return of -5% in 2023, per FactSet. In comparison, the SPDR S & P 500 ETF (SPY) has a total return of nearly 15%. NBHAX, meanwhile, has a total return of -0.9% in 2023, according to FactSet. It has an expense ratio of 1.07%. SPYD YTD line Year-to-date performance of the SPDR Portfolio S & P 500 High Dividend ETF Finding an opportunity Right now, the biggest opportunity is in industrials, which is the largest overweight sector in the Neuberger Berman Equity Income Fund relative to the market, Pomeroy said. “They have an opportunity to grow, mostly based on the fact that we have an infrastructure boom going on — we have investment taking place because of the IRA [Inflation Reduction Act] and we also have just really rickety infrastructure all over this country that needs to be rebuilt,” she noted. She sees names like Caterpillar , Deere and Eaton being the biggest beneficiaries of that boom. Deere, which has a 1.3% dividend yield, reported an earnings and revenue beat before the bell Friday. Caterpillar yields 1.9%, while Eaton has a 1.6% yield. DE YTD mountain Deere year to date Within financials, she thinks PNC Financial is the best run regional bank and is “really cheap,” with shares off nearly 22% year to date. PNC also has a 5% dividend yield. “We are being paid to wait while the environment turns,” she said.