If you run out and buy the stocks with the highest dividend yields, you'll likely find yourself owning a collection of troubled companies. You need to be more selective than that, and instead look for great companies with historically high yields. That's exactly what you'll find at industrial giant 3M (NYSE:MMM) and real estate investment trust (REIT) Federal Realty (NYSE:FRT) today.

1. More than masks

One of the things that 3M makes is protective health equipment, notably the N95 masks used by medical professionals to block the coronavirus. But the company does so much more than that, breaking its business down into the safety & industrial (36% of sales), transportation & electronics (27%), healthcare (26%%), and consumer (the remainder) areas. Within each of these business groupings are dozens of smaller businesses, from Post-it notes to dental products. Each of its divisions is highly profitable, with healthcare the "weakest" division in the third quarter, posting an operating margin of 23.5%. 

The word dividend in yellow with a jagged rising graph below it.

Image source: Getty Images.

Although earnings are under pressure because of COVID-19, the company is hardly struggling. 3M earned $2.43 per share in the third quarter, a drop of just 6% or so year-over-year. At this point 3M's stock is back close to breakeven for 2020. But it's still down around 30% from its early-2018 highs. There are some legal issues it's facing, but it should be large and financially strong enough to handle that headwind. Meanwhile, its innovative business culture should continue to drive long-term growth over time. 

However, the real draw for dividend investors is the stock's 3.3% yield. Before you say that's not high enough, compare it to the S&P 500 Index's yield of just 1.7%. Even more telling, though, is that 3.3% is near the high end of 3M's historical yield range. In fact, the last time the yield was this high was during the 2007-to-2009 recession. Note, too, that the dividend has been increased annually for more than six decades. 3M is well worth a deep dive today if you like to own great dividend stocks. 

2. A well-curated property portfolio

Speaking of incredible dividend streaks, retail-focused real estate investment trust Federal Realty has increased its dividend annually for more than five decades. Its yield of roughly 4.5% might not seem huge when you look at it on an absolute level, but it is high when you look at the REIT's history. Like 3M, Federal Realty's yield hasn't been this large since the financial crisis. It's another great company that looks like it's on sale. 

MMM Dividend Yield Chart

MMM Dividend Yield data by YCharts

There are good reasons for that discount price today -- for one thing, the REIT is dealing with headwinds related to the pandemic. Specifically, the economic shutdowns being used to slow the spread of the coronavirus have reduced traffic to its properties, and in early 2020 it was having trouble collecting all of the rent it was due from its tenants. However, rent collections are back up to 85% in October, and it was able to sign 101 new leases in the third quarter, about what it would expect to do during more normal times. 

That said, the big story here is that the REIT has a highly desirable collection of about 100 shopping centers and mixed use properties located in densely populated and wealthy regions. Although some of its tenants are struggling, it is also seeing new tenants move from nearby locations into its properties as they look to use the downturn to improve their locations. Put simply, Federal Realty is muddling through the COVID-19 hit, but will likely come out the other side an even stronger company because of its well-located properties. That's well worth a deep dive for dividend-focused investors

Looking past the yield

You can't simply look at a dividend yield in absolute terms. The true value in yield is considering it relative to other things, including a company's own yield history. Both 3M and Federal Realty are great companies offering up historically high yields, which suggests that they are trading at bargain prices today. Sure, you can find higher-yielding fare out there, but you'll risk investing in less desirable names that don't have the kind of staying power that 3M and Federal Realty have shown. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.