High yields attract dividend investors like flames attract moths -- but if you're greedy, you can get burned. And in today's low-yield world, you need to look at out-of-favor areas to find generous yields. However, if you are careful you can find a good balance between risk and reward. That's the case with real estate investment trust (REIT) W.P. Carey (NYSE:WPC) and international energy giant Total (NYSE:TOT). Here's what you need to know.

1. Balance is the key

W.P. Carey is a real estate investment trust that's focused on owning single-tenant properties where the tenants are responsible for most of the operating costs of the assets they occupy. This is what's known as a "net-lease" model. Equally important, the contracts in this space are normally fairly long. W.P. Carey's average lease term is over 10 years and come with built-in rent increases. It's generally considered a fairly low-risk business model in the REIT sector. 

A hand drawing the words risk and reward on a scale.

Image source: Getty Images.

But W.P. Carey takes things a little further, by layering portfolio diversification on top of the net-lease approach. Its portfolio spans the industrial (24% of rents), office (23%), warehouse (23%), retail (17%), and self storage (5%) sectors, with a broad "other" category making up the difference. Further, it generates around 37% of its rents from outside of the United States. This is a level of diversification that few REITs can match. 

That helps explain how W.P. Carey has been able to increase its dividend every year since its 1998 IPO. That's over two decades. And the yield is a generous 5.8% today, notably above the REIT average of 3.8% using Vanguard Real Estate ETF as a proxy for the sector. Even in the face of the global pandemic, W.P. Carey's ability to collect the rent it is owed hasn't really been impacted -- setting it apart from many of its peers, which have struggled at times to collect even half of their rent rolls. If you are looking for a high yield from a relatively safe investment, W.P. Carey should be on your short list. 

2. Looking to the future

Next up is international energy major Total. There's no question the oil and natural gas driller is facing hard times right now, with the economic shutdowns used to slow the spread of the coronavirus leading to a steep decline in energy prices. However, Total has drawn a line in the sand for dividend investors to watch: $40 per barrel oil. As recently as Total's third-quarter earnings conference call, the company committed to maintaining the dividend as long as oil averaged around that $40 level. So far it has, and the company has supported its fat 7.4% yield.

To be fair, there's some risk here, since oil and natural gas are commodities. Total can't control their prices, and is thus at the mercy of the market. But it has low operating costs, a modest net debt position, and isn't betting the house on oil. In fact, it's using its oil business to help build an "electrons" business. By 2025 it expects to generate around 15% of its sales from things like solar power and EV charging stations. Along the way, it's looking to shift its focus from oil to natural gas, which is expected to be a key transition fuel as the world moves away from carbon fuels. 

SPY Dividend Yield Chart

SPY Dividend Yield data by YCharts

All in all, Total is out of favor because of low oil prices. That's not unreasonable. However, the company appears to have the financial strength to muddle through, and remains committed to its dividend. Longer term, it has a plan to adjust with the energy markets it serves. That sounds like a good opportunity for investors to take advantage of a high yield in a deeply out-of-favor sector. There are risks for sure, but for more aggressive types Total's so-far-successful balancing act seems like a worthwhile opportunity.

Time for a deep dive

If you like dividends, then the hefty yields offered by W.P. Carey and Total are likely to be enticing to you. But that's just part of the story here, since each has an interesting business spin within its industry. For risk-averse investors, W.P. Carey's broad diversification and strength in the face of adversity will likely sound pretty compelling. For those with stronger stomachs, Total's commitment to its dividend at $40 per barrel oil, combined with its ongoing shift toward "electrons", could be a worthwhile bet in the troubled energy sector. Take the time to get to know these two, and you'll likely find that one, or both, of these high-yield dividend stocks ends up in your portfolio.