For more than a century, Wall Street has been a bona fide wealth-creating machine. Though other asset classes, including bonds, commodities, and real estate, have also delivered positive long-term returns, none of these other investments has come particularly close to matching the average annual return of stocks over the last 100 years.
With thousands of publicly traded companies and exchange-traded funds (ETFs) to choose from, there's probably one or more securities that can help investors meet their goals. But among the countless ways investors can grow their wealth on Wall Street, few have proved more successful over long periods than buying and holding high-quality dividend stocks.
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Companies that pay a regular dividend to their shareholders are typically profitable on a recurring basis, capable of providing transparent long-term growth outlooks, and have demonstrated their ability to navigate a challenging economic climate. Best of all, dividend stocks tend to outperform.
In The Power of Dividends: Past, Present, and Future, the analysts at Hartford Funds, in collaboration with Ned Davis Research, compared the performance of dividend stocks to non-payers from 1973 to 2024. They found that dividend stocks more than doubled the average annual return of non-payers (9.2% vs. 4.31%), and did so while being notably less volatile.
Even with the benchmark S&P 500 hitting record highs, amazing deals can still be found among ultra-high-yield dividend stocks -- i.e., companies whose yields are at least four times higher than the current yield of the S&P 500 (1.24%, as of June 27). The following three ultra-high-yield stocks, which are sporting an average yield of 9.02%, make for no-brainer buys in July.
Annaly Capital Management: 14.88% yield
The first sensational buy that income seekers can confidently add to their portfolios as we turn the page to the second-half of 2025 is mortgage real estate investment trust (REIT) Annaly Capital Management (NLY 2.44%). While Annaly's nearly 14.9% yield may appear too good to be true, the company recently raised its quarterly payout and has averaged a double-digit yield over the trailing two decades.
NYSE: NLY
Key Data Points
Throughout much of this decade, mortgage REITs have been disliked by Wall Street. This industry is highly sensitive to rapid changes in monetary policy and interest rates. The Federal Reserve increasing interest rates at the fastest clip in four decades from March 2022 to July 2023 increased short-term borrowing costs for companies like Annaly and lowered their net interest margin.
The good news for Annaly Capital Management and its mortgage REIT peers is that we're entering a favorable environment for growth. The nation's central bank is now in a rate-easing cycle, and declining interest rates usually allow mortgage REITs to expand their net interest margin. In other words, they can still buy mortgage-backed securities with robust yields, but short-term borrowing costs tend to decline. Well-telegraphed monetary policy shifts during a rate-easing cycle are ideal for Annaly.
Something else to consider is that Annaly Capital Management's $84.9 billion investment portfolio is heavily skewed toward highly liquid agency assets. An "agency" security is backed by the federal government in the unlikely event of default on the underlying asset. This added layer of protection is what affords Annaly the luxury of utilizing leverage to its advantage and pumping up its profits.
With the innerworkings of the mortgage REIT industry becoming more favorable, Annaly trading at a slight discount to its book value, as of the March-ended quarter, makes it a smart buy for income-seeking investors.
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Pfizer: 7.1% yield
A second ultra-high-yield dividend stock that makes for a no-brainer buy in July is pharmaceutical titan Pfizer (PFE +1.71%). Its current yield tops 7% and looks to be sustainable, based on growth forecasts from management.
Whereas the S&P 500 has rallied to a fresh record high, Pfizer stock has struggled under the weight of its own prior success. Investors sent shares of the company higher during the height of the COVID-19 pandemic for having developed a vaccine (Comirnaty) and oral therapy (Paxlovid). But between 2022 and 2024, combined sales of these COVID-19 therapeutics declined from more than $56 billion to $11 billion, respectively. Another drop-off is expected this year, with Paxlovid sales falling off in a big way in the March-ended quarter.
While it might be unnerving to see Pfizer's COVID-19-related revenue decline, keep in mind that this area of focus didn't exist at the end of 2020. Any recurring sales from this segment is a bonus from where things stood 4.5 years ago. Furthermore, Pfizer's net sales from all segments actually grew by more than 50% between 2020 and 2024. In spite of weaker sales tied to its COVID-19 franchise, Pfizer's product portfolio, as a whole, is only getting stronger.
NYSE: PFE
Key Data Points
On top of continued strength from Pfizer's specialty care segment, there's plenty of optimism that follows its $43 billion acquisition of cancer-drug developer Seagen in December 2023. This deal added more than $3 billion in annual sales, provides ample opportunity to boost margins via cost synergies, and should meaningfully bolster Pfizer's oncology pipeline. Ongoing improvements in cancer screening and diagnostics, coupled with strong pricing power for brand-name cancer drugs, bodes well for Pfizer's oncology division.
The final piece of the puzzle is Pfizer's historically inexpensive valuation. Amid one of the priciest stock markets in history, shares of Pfizer can be scooped up for around 8 times forecast earnings in 2025 and 2026. This compares to an average forward price-to-earnings (P/E) ratio of 10.2 over the trailing-five-year period.
The Campbell's Company: 5.09% yield
The third ultra-high-yield dividend stock that stands out for all the right reasons and can be purchased with confidence by income investors in July is The Campbell's Company (CPB +2.89%). The 146-year-old food company formerly known as Campbell's Soup Company sports a nearly 5.1% dividend yield, which is an all-time high.
Campbell's stock is effectively hovering at a 16-year low due to two factors. First, demand in the snack food category has recently weakened, which isn't unique Campbell's. The other issue (also not unique to Campbell's) is President Donald Trump's recently imposed steel tariffs, which are expected to take a bite out of the margins of food companies that can their products. While these are tangible headwinds, they're both relatively short-term in nature and overlook some of the factors that make The Campbell's Company a solid long-term investment.
NASDAQ: CPB
Key Data Points
Perhaps the most obvious catalyst for Campbell's is that it sells basic need goods, such as food and beverages. No matter how well or poorly the U.S. economy and stock market perform, consumers need food and beverages to survive. This leads to highly predictable operating cash flow for Campbell's in any economic climate and makes it a particularly attractive stock to own during periods of heightened volatility and uncertainty.
Furthermore, Campbell's went on the offensive last year to improve its product portfolio and make its operations more efficient. It announced the closure of a plant, as well as $230 million in investments through fiscal 2026 (Campbell's fiscal year usually ends in late July) in existing plants to bolster production efficiency and buoy margins. Ongoing innovation and the occasional acquisition are ways Campbell's looks to deliver volume growth and support the value of its brands.
The valuation is also compelling. With Campbell's stock at levels not consistently witnessed since 2009, shares can be purchased for around 10 times forecast earnings this year. This equates to a 31% discount to the company's average forward P/E ratio over the past half-decade.
