It's officially the homestretch for 2022, and if you're like most investors, you can't wait to put this year into the rearview mirror. Following one of the least volatile years in a decade, 2022 has featured bear markets across the board for all three major U.S. indexes, as well as the worst year for the bond market on record.

But if there's a bright side to the market's poor performance, it's that long-term investors are being given a unique opportunity to scoop up amazing companies at a discount valuation.

The words Wall Street, etched in gold color on the side of a building.

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Dividend stocks can be a smart buy for 2023

Although growth stocks have been hit the hardest by the 2022 bear market, and are therefore the most logical place for investors to consider putting their money to work, dividend stocks can be an incredibly smart investment during a downturn. Companies that regularly pay a dividend are almost always profitable and time-tested. This means you won't have to worry about whether these businesses will survive a recession.

What's more, income stocks have a habit of crushing their non-dividend-paying competition in the return department. In 2013, J.P. Morgan Asset Management released a report that examined the performance of dividend stocks that initiated and grew their payouts over 40 years (1972-2012) against publicly traded companies that weren't paying a dividend. On an annualized basis, the income stocks trounced the nonpayers (9.5% per year return versus 1.6% per year return) over four decades.

However, things can get a bit tricky when investing in dividend stocks with high yields. Previous studies have shown that the higher yields go, the greater the risk to investors. For example, if a failing business model causes a company's share price to sink, its yield is going to climb. This could trick income investors into thinking they're getting an amazing deal, when in reality they've fallen for a yield trap.

Thankfully, not all supercharged income stocks are trouble. In fact, two ultra-high-yield dividend stocks have garnered the attention of Wall Street analysts for all the right reasons. Based on the respective high-water price targets issued by Wall Street, the following two ultra-high-yield dividend stocks could offer as much as 46% upside in 2023, on top of their already superior yields.

Enterprise Products Partners: Implied upside of 46%, 7.7% yield

The first ultra-high-yield dividend stock with serious return potential in 2023, according to at least one Wall Street analyst, is energy stock Enterprise Products Partners (EPD 0.72%). Analyst Brian Reynolds of UBS believes Enterprise can hit $36 in the upcoming year, which would represent upside of 46% from where shares closed on Nov. 29.

The first factor working in Enterprise Products Partners' favor is that it's a midstream energy company. This effectively means it's an energy middleman tasked with getting product from drilling fields to ports, refineries, or chemical plants. As of the end of the third quarter, Enterprise operated over 50,000 miles of pipeline, 20 deepwater docks, and could store 260 million aggregate barrels of natural gas liquids, petrochemicals, refined products, and crude oil. 

Midstream companies almost exclusively work off of long-term fixed-fee and volume-based contracts. These types of contracts ensure steady and predictable cash flow no matter how volatile the spot price is for crude oil, natural gas, or natural gas liquids. Knowing in advance what the company will generate in cash flow is what allows Enterprise Products Partners to allocate capital for infrastructure projects and acquisitions without adversely impacting its distribution or profits.

Speaking of projects, Enterprise is gushing with growth potential. The company has more than a dozen major projects underway with a grand total price tag of $5.5 billion. More than half of these projects are slated to come online by the end of next year. 

To add to this point, the global energy supply chain has been compromised by the COVID-19 pandemic and Russia's invasion of Ukraine. Years of underinvestment will make it difficult to ramp up the supply of key energy commodities, thereby lifting the spot price of oil and natural gas. This is a recipe for domestic drillers to boost production, and for Enterprise Products Partners to lock in additional long-term contracts.

As a final note, the company has increased its base annual distribution for 24 consecutive years, and its payout was never even remotely in danger of being cut during the worst of the pandemic. Within the energy space, there may not be a safer ultra-high-yield dividend than what Enterprise Products Partners dishes out to its investors.

A nurse checking on a resident at a senior housing community.

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Sabra Health Care REIT: Implied upside of 40%, 9.3% yield

The second ultra-high-yield dividend stock with supercharged upside in 2023, according to Wall Street, is healthcare-focused real estate investment trust (REIT) Sabra Health Care REIT (SBRA 0.13%). Stifel analyst Stephen Manaker expects shares of Sabra Health to make a run at $18 in the upcoming year, which would offer up to 40% upside, relative to where Sabra closed on Nov. 29.

Whereas most healthcare-related companies are fairly immune to economic downturns -- people don't stop getting sick or requiring medical care just because the U.S. economy hits a speed bump -- Sabra Health Care REIT wasn't so lucky when the COVID-19 pandemic arrived.

As of Sept. 30, Sabra operated more than 400 combined skilled nursing facilities and senior housing communities. Because seniors were hit particularly hard by the original strain of COVID-19, occupancy rates at its owned properties plunged in 2020. For a brief period following the emergence of the pandemic, there was serious doubt about Sabra's future rent collections.

The good news for Sabra is that the worst of the pandemic appears to have passed. Despite these challenges, the company managed to collect more than 99% of its rents on time since the COVID-19 pandemic began. Even more importantly, it's been able to navigate some bumps in the road without too much pain.

For instance, Sabra Health Care had to rework its master lease agreement with Avamere in February, as well as divvy up two dozen property leases to Avamere and Ensign Group (expected to be completed by Feb. 1, 2023) after North American Health Care deemed its lease agreements with Sabra untenable. While Sabra would prefer to see occupancy rates at senior housing communities and skilled nursing facilities bounce back at a faster rate, its ability to navigate challenges has sustained its 9.3% payout and encouraged shareholders.

The other factor working in Sabra Health Care's favor is the aging of America. As baby boomers grow older, demand for skilled nursing and seniors housing is expected to climb. That would presumably bode well for the company's rent-pricing power over the long run.