High yield equals high risk. That's the conventional wisdom about dividend stocks. With this perspective, investors shouldn't bank on holding high-yield dividend stocks for very long -- if they buy them in the first place.
However, the conventional wisdom isn't always applicable. Here are three high-yield dividend stocks that you'll probably never have to sell.
Image source: Getty Images.
1. Easterly Government Properties
I think the conventional wisdom about high yields equalling high risk is absolutely demolished with Easterly Government Properties (DEA 1.66%). The real estate investment trust (REIT) boasts a dividend yield of 5.6%. However, it's about as far from high-risk as you'll find.
As its name indicates, Easterly owns properties that it leases to government agencies. The company specializes in acquiring properties to be used by mission-critical U.S. federal agencies including the Veterans Administration, Federal Bureau of Investigation, and General Services Administration.
Easterly's management often mentions that much of the company's cash flow is "backed by the full faith and credit of the United States government." They're not exaggerating. Of the company's 89 properties, all but one is leased to a federal agency with long-term agreements in place.
Uncle Sam seems likely to choose leasing buildings versus owning even more in the future because of budget constraints. Easterly should be able to continue growing -- and keeping those dividends flowing -- for a long time to come.
2. Medical Properties Trust
If you like Easterly's yield, you'll love Medical Properties Trust (MPW 2.65%). It's also a REIT and pays a dividend yield of 6.4%. While some of its peers have reduced their dividends, Medical Properties Trust has increased its dividend for 10 consecutive years.
You won't give up the potential for solid returns with this dividend stock. Over the past five years, Medical Properties Trust has delivered a total return in line with that of the S&P 500.
The company owns around 440 hospitals and operates in 10 countries. Medical Properties Trust expects to invest between $1 billion and $3 billion this year in acquiring additional properties. Acquisitions are important to Medical Properties Trust's growth. However, its built-in annual rent increases help too.
It's true that many high-yield dividend stocks require investors to trade off those yields for either higher risk or anemic growth. Medical Properties Trust is a clear exception. That's why I think it's the best healthcare dividend stock on the planet.
3. Verizon Communications
Income investors have liked Verizon Communications (VZ 3.25%) for decades. The telecommunications giant offers a dividend yield of 5.2%. Verizon has also increased its dividend for 15 consecutive years.
While Verizon has been a steady Eddie on the dividend front, it hasn't been a big winner for investors in recent years. Still, though, the telecom stock is holding up pretty well so far this year with the overall market pullback.
More importantly, Verizon could have huge growth potential going forward. Increased 5G adoption opens up lots of opportunities for the company, including powering home internet use.
Verizon is by far the biggest of these three high-yielders based on market cap. However, it's also the most attractively valued with shares trading at close to nine times expected earnings. With its juicy dividend, history of dividend increases, and solid growth prospects, Verizon is a textbook example of a dividend stock to buy and hold.
