Dividend stocks are an excellent way to generate investment income in retirement, or if you simply like companies that pay shareholders to hold their stock. I mean, what's wrong with that?
The higher a dividend stock's yield is, the more income you'll get for your buck. Remember, a company sets the dividend amount, and the market, through the share price, sets the yield. An ultra-high yield can be the market's way of pointing out trouble in the underlying company.
There are exceptions. Some types of companies are better at generating cash for dividends than others.
Here are five ultra-high-yield dividend stocks you can count on in 2025 and beyond.
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1. Realty Income
Current yield: 5.6%
Realty Income (O -0.38%) is one of the world's largest real estate investment trusts (REITs), which acquire and lease properties, then distribute most of their taxable profits to shareholders. The company is one of the few that pay a monthly dividend, a nice perk for people who want smooth income streams from their portfolio. Realty Income leases more than 15,600 properties, primarily to tenants in consumer-facing industries, like retail stores.
The company has raised its dividend for 110 consecutive quarters, totaling roughly 30 years. The dividend payout ratio is comfortable at 75% of its anticipated 2025 funds from operations, and comes backed by the company's investment-grade credit rating. Investors can confidently buy Realty Income and enjoy the dividends to follow.
2. Altria Group
Current yield: 6.7%
Tobacco isn't the industry it was 40 years ago, but Altria Group (MO -1.09%) continues to pay dividends like clockwork. It sells the iconic Marlboro cigarette brand in the United States. Its decades of success have made Altria a Dividend King, an honor that comes only after 50 years of uninterrupted dividend increases. Despite decades of steadily declining cigarette volumes, Altria and other tobacco companies have slowly raised prices to offset declines and eke out growth.
Altria's dividend payout ratio hovers around 80% of cash flow, with a multibillion-dollar stake in Anheuser-Busch InBev as a financial safety cushion. Eventually, Altria must figure out how to generate more revenue from non-smokable products, but there is a bit of runway left before that should deter yield-hungry investors.
3. British American Tobacco
Current yield: 6.8%
Staying in the tobacco space, British American Tobacco (BTI -0.60%) lacks the brand power of Marlboro and Altria's concentration in the lucrative U.S. market. However, it is more diversified than Altria, as it operates globally and has made more progress in next-generation nicotine products, such as electronic vaping devices. That could give it a leg up on Altria if investors want to hold far beyond the next few years.
British American Tobacco is an international company, so currency exchange can cause the dividend to fluctuate. But make no mistake, investors can confidently hold the stock. The dividend has grown over time since the company switched to a quarterly payment schedule. The dividend was only 66% of the company's cash flow last year, leaving room to sustain and grow a generous payout for shareholders.
4. Verizon Communications
Current yield: 6.1%
U.S. wireless carriers, such as Verizon Communications (VZ -0.57%), have become utility-like businesses. Today, almost all Americans have mobile phones, and they pay their phone bill like they would their heat and electricity because they rely on their phones to make calls, send texts, browse the internet, and play games. Verizon is the leader among the three dominant players in the U.S. wireless market. The steep costs of building and maintaining cell towers and other infrastructure keep new competitors at bay.
Verizon has demonstrated its dependability with 21 consecutive annual dividend increases. Investors will love that Verizon will probably continue that streak -- its dividend payout ratio is only 58% of 2025 earnings estimates. Verizon probably won't grow very quickly in a saturated U.S. wireless market, but it offers one of the highest yields you can comfortably hold.
5. Enbridge
Current yield: 5.7%
Energy can be a volatile industry, but Enbridge (ENB -0.21%) has been anything but. The Canadian energy company operates thousands of miles of pipelines, transporting oil and natural gas throughout North America. It also operates gas utilities that serve more than 3 million people, as well as assets in wind and solar power generation. The lion's share of Enbridge's business, its pipelines and utilities, is highly regulated and produces nice, steady profits.
Enbridge has built an excellent dividend track record, with 28 consecutive annual increases. Management maintains the dividend at approximately 60% to 70% of its distributable cash flow, which enabled the company to raise its dividend through the COVID-19 pandemic, one of the worst events for energy companies in recent history. Investors shouldn't hesitate to buy and hold this battle-tested ultra-high-yield winner.
