History speaks volumes on Wall Street. It shows us that all significant downturns in the major U.S. stock indexes are eventually cleared away by bull market rallies. Additionally, it provides clear-cut evidence that dividend stocks offer a path to outperformance.

Back in 2013, J.P. Morgan Asset Management, a division of money-center bank JPMorgan Chase, published a report that compared the annualized returns of companies that initiated and grew their payouts between 1972 and 2012 to stocks that didn't offer a dividend over the same 40-year period. The dividend stocks produced a hearty 9.5% annualized return over four decades, while the non-payers trudged their way to an annualized return of just 1.6%.

A person counting a pile of one hundred dollar bills in their hands.

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But you don't have to settle for a run-of-the-mill income stock that yields 1% or 2% to grow your wealth. Although high-yielding dividend stocks require some extra vetting, deals can be found. What follows are three magnificent, ultra-high-yield dividend stocks -- "ultra-high-yield" in the sense that they yield around 7% or above -- that are screaming buys in July.

AT&T: 6.95% yield

The first supercharged income stock that's begging to be bought in July is none other than telecom giant AT&T (T -0.59%). The roughly 7% yield AT&T offers is more than four times higher than the 1.55% yield of the S&P 500.

AT&T's biggest issue is that it's a mature company surrounded by tech stocks that are consistently growing at a faster rate. With interest rates at or near historic lows for much of the past 14 years, investors chose to overlook telecom stocks in favor of growth. However, with value stocks coming back into focus during the 2022 bear market, AT&T has an opportunity to shine, once more.

AT&T's steadiest catalyst through at least the midpoint of the decade is the 5G revolution. After roughly a decade of 4G LTE download speeds, wireless providers upgrading their infrastructure to handle 5G speeds should entice consumers and businesses to steadily replace their devices. The benefit for AT&T will be seen via an uptick in data consumption. More data usage provides a path for AT&T to generate even higher margins from its wireless segment.

Additionally, the company's broadband division is gaining steam. AT&T is working on 13 consecutive quarters with at least 200,000 AT&T Fiber net additions and has delivered five straight years of at least 1 million AT&T Fiber net adds. Gobbling up mid-band spectrum to package 5G broadband to households and businesses appears to be paying off handsomely for the company.

A final catalyst for AT&T is its cleaner balance sheet. In April 2022, AT&T spun off WarnerMedia, which was subsequently merged with Discovery to create a new media entity, Warner Bros. Discovery. Upon completion of this merger, AT&T received more than $40 billion, which consisted of a combination of cash and debt that was to be assumed by Warner Bros. Discovery. Over the past year, AT&T's net debt has declined from $169 billion to $134.7 billion. While there's plenty of room for further improvement, there's little concern about AT&T's 7% yield.

Valued at a little north of 6 times current-year and forward-year earnings, AT&T has limited downside and intriguing upside for patient investors.

Innovative Industrial Properties: 9.86% yield

A second magnificent, ultra-high-yield dividend stock that stands out as a screaming buy in July is cannabis-focused real estate investment trust (REIT) Innovative Industrial Properties (IIPR -1.58%). IIP, as Innovative Industrial Properties is more commonly known, sports a nearly 10% yield and has grown its quarterly payout by 1,100% since 2017.

The plain-as-day headwind for IIP over the past couple of quarters has been the company's collection rate. IIP was collecting just 92% of its rents on time in January and February 2023, according to press releases from the company. The concern here is that if the multistate operators (MSOs) IIP has leased fail to make their payments, the company's adjusted funds from operations will decline, and it'll have to reduce its dividend. Most investors pile into REITs because of their advantaged payouts.

But there's good news. In spite of a number of recent delinquencies, Innovative Industrial Properties ultimately collected 98% of its rents during the March-ended quarter. Though all REITs eventually contend with delinquencies, it's how they respond to these challenges that determines if they're worth investing in. IIP is successfully reworking some of its master lease agreements and divesting properties to ensure an uninterrupted stream of cash flow.

Something else working in IIP's favor is the structure of its leases. Its entire 108-property portfolio is triple-net leased (also known as "NNN" leased). An NNN lease puts the onus of property expenses on the renter, including utilities, maintenance, property taxes, and insurance. Although NNN leases usually result in the tenant paying less per month, it removes unexpected costs from IIP's plate. Cash-flow predictability is key to maintaining a nearly 10% yield.

What's interesting about IIP is that it actually benefits from Capitol Hill's lack of progress on cannabis reform. As long as marijuana remains a federally illicit substance, MSOs will have patchy access to basic financial services. IIP attempts to resolve this inequity via its sale-leaseback agreements. Innovative Industrial Properties purchases properties with cash and immediately leases them back to the seller. This type of transaction has helped IIP pack its portfolio with long-term tenants.

A multiple of 13 times consensus earnings is an attractive price to pay for an industry-leading REIT in the cannabis space.

An engineer using a walkie-talkie while standing next to energy pipeline infrastructure.

Image source: Getty Images.

Enterprise Products Partners: 7.44% yield

The third magnificent, ultra-high-yield dividend stock that's a screaming buy in July is energy stock Enterprise Products Partners (EPD -0.47%). Enterprise has increased its base annual distribution for 25 consecutive years and is parsing out a hearty 7.4% yield that's almost 5 times the yield of the S&P 500.

The hesitation some investors may have with Enterprise Products Partners is its oil and gas associations. Just three years ago, crude oil and natural gas demand plummeted during the initial lockdowns of the COVID-19 pandemic. The subsequent plunge in energy commodities clobbered drilling companies.

However, Enterprise Products Partners isn't a driller. It's one of America's largest midstream energy companies -- over 50,000 miles of transmission pipeline and the ability to store in excess of 260 million barrels of liquids -- and it was well protected from the tumult that struck the energy sector.

What makes energy middlemen like Enterprise special is the contracts they work out with drilling companies. Approximately three-quarters of the company's gross operating margin in 2022 originated from long-term, fixed-fee contracts. These volume-based contracts provide transparent and predictable cash flow to Enterprise. Being able to accurately forecast the cash it'll generate from its operations is exceptionally important for a company that has to outlay capital for new projects, acquisitions, and its aforementioned distribution.

To build on the above point, Enterprise is spending approximately $6.1 billion on more than a dozen major projects, most of which concern natural gas liquids. All of these projects will be online before the end of 2025, and they should provide an incremental lift to cash-flow generation. 

What's more, macroeconomic factors appear to be working in Enterprise Products Partners' favor. Ukraine's ongoing war with Russia, coupled with more than three years of capital underinvestment by large energy companies during the pandemic, has created a relatively tight supply market for crude oil. When the supply of a commodity is constrained, it's fairly normal for its spot price to tread water or climb higher. This is a recipe for increased future drilling and for Enterprise to land more lucrative long-term, fixed-fee contracts.

A multiple of 10 times current-year and forward-year earnings is a fair price to pay for a truly wonderful company like Enterprise Products Partners.