Sturdy dividend-paying stocks became a popular trade in March as bond yields stayed largely stable.

The SPDR S&P Dividend exchange-traded fund () rose 4.4% in March while the ProShares S&P 500 Dividend Aristocrats ETF () ended 4.2% higher. Both funds had their best monthly performance since December.

The two ETFs, which invest in dividend payers like Coca-Cola () and 3M (), are highly liquid with billions in assets, making them common among investors seeking dividend exposure. The Dividend Aristocrats are companies that have raised their dividends for 25 years or more.

Things haven’t always looked this good for dividend-paying companies, which attract investors by sharing a slice of their profits. Since mid-2022, their payments have seemed less attractive overall compared with government bonds.

Compared to Treasuries, investors typically expect dividend stocks to offer additional yield to compensate for the inherent risks associated with stocks—as well as the risk of recession, which could result in potentially lower payouts to shareholders.

But ultrasafe government bonds have largely taken the limelight away from dividend stocks since mid-2022, when Treasury yields rose decisively alongside the Federal Reserve’s interest-rate hikes. The 10-year note’s yield has more than doubled over the past three years.

In 2022, the SPDR S&P Dividend ETF was down 0.51%, and last year it returned just 2.55%.

In turn, dividend ETFs' rally in March was a result of the 10-year Treasury yield staying largely fixed. It ended Thursday at 4.192%, just a few basis points away from 4.251% at the start of the month.

"This [dividend] investment style has been deeply out of favor since the October 2022 lows, so it is good to see it starting to work better (even over just a month)," writes DataTrek Research Co-Founder Nicholas Colas.

Recent yield action can be ascribed to last week’s Fed forecast, which showed that rate cuts are still in order, with three expected this year. Benchmark interest rates are expected to decline to 3.9% by 2025 and to 3.1% in 2026, falling from the present level of 5.25% to 5.50%.

The path ahead for dividend funds will largely depend on how yields perform. If investors have to pare back their projections for rate cuts because of higher-than-expected inflation readings or new Fed commentary, the 10-year yield could rise much more than a few points over a month—even if the Fed still cuts rates later this year.

Investors should keep an eye on the 10-year yield hitting 4.352%, this year’s intraday high set on Feb. 22. These are what’s called resistance levels, or points from which the yield has struggled to rise recently. If the 10-year consistently goes above that level, it could break through further. And in that case, dividend ETFs' strong run could reverse once again.