2 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

As an income investor, you're always on the lookout for investments that offer high dividends today and promise to maintain that cash flow in the future. Diversification is key, and building your income portfolio is like assembling a sports team – you want a core of reliable players and some higher-risk, higher-reward rookies. Today, we're highlighting two core players for your income portfolio that can fuel your income stream indefinitely.

Pick #1: WPC - Yield 5.3%

W. P. Carey (WPC) is a triple-net property REIT that invests in a diversified portfolio of real estate with contracts that make the tenant responsible for property-level expenses like property taxes, insurance, or maintenance. This limited exposure to property-level expenses means inflation is not a material headwind for WPC's costs. The majority of WPC's costs are fixed, and inflation does drive higher rent growth, with 61% of WPC's leases having contractual rent increases linked to CPI.



With CPI over 5% for the past three months and inflation unlikely to slow down anytime soon, WPC will see rents rising much faster than they have in the past decade – next year and likely in the following years if inflation remains high. In addition to internal growth from properties WPC already owns, they are setting an aggressive acquisition pace. Current management guidance is that WPC will buy $1.5-$2.0 billion in new properties for 2021. The beauty of the triple-net lease structure is that it does not require much work from the landlord after the lease is signed. WPC has 188 employees with a portfolio of over 1,260 properties worth well over $12 billion. The business is very scalable, and WPC can add properties without significantly increasing corporate-level costs. Talk about a great holding for an inflationary environment – you have exposure to physical assets with the real estate, which usually goes up in value with inflation, revenues directly linked to inflation, and few expenses that are impacted by inflation.

We are confident that WPC will continue raising its dividend every quarter and will achieve "Dividend Aristocrat" status. In fact, their raises in 2022 are likely to be larger than we have seen in recent years, thanks to inflation and aggressive acquisitions. When investors start lining up to look at the new Dividend Aristocrat and driving up the share price, we will already be holding it. This is exactly the holding you want to have in an inflationary environment – revenues that go up with inflation and expenses that are primarily fixed.

Pick #2: ETO - Yield 6.7%

Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund (ETO) is firing on all cylinders, recently raising its dividend 25% to $0.17992/month. ETO had the "problem" of its gains outrunning its dividend. CEFs are required to distribute the majority of income and capital gains to shareholders. One of the great things about CEFs is that they convert investments with no dividends, but great capital gains, into an income for us. ETO's NAV (Net Asset Value) is now higher than it has been since 2007 and still climbing. With NAV still climbing, we will not be surprised to see another dividend raise late this year or early next year.

ETO calls itself tax-advantaged because it looks to generate its distributions from qualified dividends and long-term capital gains. Both of those sources are tax-advantaged in that they are taxed at a lower rate than unqualified dividends, interest, and short-term capital gains. Among ETO's largest investments, you see well-established mega-caps like Alphabet (GOOGL), Amazon (AMZN), Microsoft (MSFT), Apple (AAPL), and Facebook (FB). U.S. companies make up about 60% of its portfolio, with the other 40% in international investments, which also tend to be well-established companies. These are companies that you generally will not see in an income portfolio. ETO allows us to get exposure to the companies that often drive the market indexes, converting them into tax-advantaged dividends.



ETO provides us with fantastic diversity, plus a high yield that is tax-efficient. It invests in well-established, very low-risk large and mega-caps. Equity markets will continue to be driven up by the substantial amount of liquidity in the financial system, and ETO is exposed to the major market movers.

Conclusion

While you are building your team of dividend stocks, you must stack your lineup with some power players that you can count on – companies that don't need to be babysat but can be relied upon to do exactly as expected. WPC is an opportunity to buy a Dividend Aristocrat before it becomes one. WPC paid and raised its dividend through the dot-com bust, through the Great Financial Crisis, through COVID, and the good times too. WPC proved the quality of its portfolio during COVID, posting 95%+ rent collections throughout when many peers saw collection rates below 90%. Looking forward, there is a lot to be excited about with inflation at multi-decade highs. WPC's inflation-connected leases will provide a strong tailwind. Additionally, WPC is on pace for $1.5-$2 billion in new acquisitions. WPC is stronger than ever and still trading below pre-COVID highs.

ETO invests in some of the most widely recognized companies in the world. ETO uses a modest level of leverage (~17%) to boost returns. ETO converts the capital gains from the stocks that drive the market indexes into a large income stream for investors. Combined, these two picks provide you with significant diversity and international exposure. The best part is that while both are paying a generous yield today, it is also likely that both will be raising their dividends further in the future. That's a clear win-win. These are two dividend power players to add to your line-up. Build your portfolio one investment at a time, and you will have an unstoppable team fueling your income stream! Let your team handle earning you money while you enjoy the freedom of financial security. One less thing for you to micro-manage or worry about. You can go enjoy all the experiences life has to offer while your team of expert heavy-hitting income securities churn out outstanding income for you. They say that a boss can make or break a workplace. In your portfolio, you are the boss. Hire the right team members and you will never regret it.