Many dividend stocks slumped in 2022 and 2023 as rising interest rates drove investors toward higher-yielding CDs, bonds, and T-bills. However, the Federal Reserve reduced its benchmark rates six times in 2024 and 2025 as inflation cooled off.
As those rates declined, high-yield stocks became more appealing again. Let's take a closer look at two of my personal favorites -- Realty Income (O 0.20%) and Energy Transfer (ET +1.21%) -- and why they're still rock-solid stocks for income-oriented investors.
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Realty Income
Realty Income is one of the world's largest equity real estate investment trusts (REITs). It buys up properties, leases them out, and splits its rental income with its tenants. As a triple-net lease REIT, its tenants are responsible for covering their own maintenance fees, insurance, and property taxes. It also must pay out at least 90% of its taxable income as dividends to maintain a lower tax rate.
Realty owns more than 15,500 commercial properties across the U.S. and Europe. It primarily leases its properties to recession-resistant retailers, including drugstores, convenience stores, and discount stores. Its largest tenants are 7-Eleven (3.3% of its annualized base rent), Dollar General (3.2%), and Walgreens (3.1%).
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Key Data Points
Some of its tenants struggled with store closures in recent years, but its stronger retail tenants opened more stores to offset that pressure. Its occupancy rate has remained above 96% since its IPO in 1994, and this ratio has held steady year over year at 98.7% in the third quarter of 2025.
Realty's resilient portfolio of income-generating properties enables it to pay monthly dividends, and it has raised its payout 132 times since its public debut. It expects its adjusted funds from operations (AFFO) per share to rise from $4.19 in 2024 to $4.25-$4.27 in 2025. That should easily cover its forward dividend rate of $3.22, which translates to a substantial forward yield of 5.6%.
At $57, Realty's stock still appears to be a bargain at 13 times its estimated AFFO per share for 2025. Its high yield and low valuation should limit its downside in this choppy market, and its high dividends should draw in more income investors as interest rates decline.
Energy Transfer
Energy Transfer, one of the top midstream companies in America, operates over 140,000 miles of pipeline in 44 states. It provides delivery, storage, and terminalizing services for natural gas, liquefied natural gas (LNG), natural gas liquids, crude oil, and other refined products.
Energy Transfer charges upstream extraction companies and downstream refining companies fees to use its infrastructure. The midstream "toll road" model is well-insulated from volatile natural gas and crude oil price swings, as it merely requires these resources to keep flowing through its pipelines to generate stable revenues and profits.
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Key Data Points
Energy Transfer structures its business as a master limited partnership (MLP), which combines the tax advantages of a private partnership with the liquidity of a publicly traded stock. Yet it remains vulnerable to tariffs, which drive up its material, labor, and construction costs, and high interest rates, which increase its interest expenses and make it more expensive to expand its pipelines.
However, its adjusted distributable cash flow (DCF) -- which funds its annual distributions -- still increased from $5.74 billion in 2020 to $8.36 billion in 2024. During the same period, its yearly distributions rose from $2.47 billion to $4.39 billion. Its acquisitions of industry peers, the expansion of its Permian Basin operations, and the rising demand for LNG exports drove that growth, even as the pandemic and other macroeconomic headwinds rattled the global economy.
For 2025, analysts expect Energy Transfer's earnings per unit (EPU) to rise 4% to $1.34 -- covering its forward distribution rate of $1.33 per share -- which equals a forward yield of 8%. A portion of that yield comes from a tax-efficient return of capital, while its adjusted DCF covers the rest. At $17, it still looks undervalued at 13 times its projected EPU for 2025 -- so it's still a great choice for value-oriented income investors.
