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Why I'm Buying These Top High-Yield Dividend Stocks Like There's No Tomorrow

Victor HaleTuesday, Apr 22, 2025 8:08 am ET

151min read

In a market where volatility often overshadows stability, high-yield dividend stocks offer a compelling refuge for income-seeking investors. As of April 2025, several companies are delivering dividend yields above 6%, some even exceeding 9%, while maintaining resilient fundamentals. But how do we separate the diamonds from the duds? Let’s dive into the top picks and why I’m loading up on these opportunities—cautiously, but decisively.

The Allure of High-Yield Dividends

High-yield dividend stocks aren’t just about the payout percentage. They’re a testament to a company’s cash flow discipline, shareholder commitment, and ability to weather economic storms. Consider Western Union (WU), which boasts a 9.2% dividend yield—the highest on my radar. While its "C" risk score (indicating moderate sustainability concerns) requires scrutiny, its operational turnaround in Q4 2024, with a 1% revenue rise and EPS jumping to $1.14, suggests a company on the mend. Pair that with its global dominance in cross-border payments—550,000 agents in 200+ countries—and the yield becomes harder to ignore.

Top Picks: Yield vs. Sustainability

Here are the standouts, ranked by yield, along with their risk profiles and key metrics:

1. Western Union (WU) – 9.2% Yield

Risk Score: C (Moderate Risk)
Why Buy?: Its Q4 2024 results reflect progress in digital transformation (25% of revenue now digital) and cost-cutting. A dividend payout ratio of 62% (below 100%) suggests some safety.

2. Whirlpool (WHR) – 7.7% Yield

Risk Score: B (Low to Moderate Risk)
Why Buy?: Despite a 18.7% revenue decline in Q4 2024, its $4.57 EPS beat estimates, and 2025 guidance projects $10.00 EPS. A payout ratio of 47% makes this yield sustainable.

3. Altria (MO) – 7.2% Yield

Risk Score: B (Low to Moderate Risk)
Why Buy?: Its 3.4% EPS growth in 2024 and $10.2 billion in shareholder returns highlight its conservative capital allocation. The 2–5% 2025 EPS growth forecast aligns with a payout ratio of 68%.

4. Universal Health Realty (UHT) – 7.3% Yield

Risk Score: B (Low to Moderate Risk)
Why Buy?: A healthcare REIT with 69 properties, it delivered a $0.82 FFO per share in Q3 2024, a 5% increase. Healthcare’s defensive nature adds stability.

The Risks: High Yields, Higher Caution

Not all high-yield stocks are created equal. Consider Kohl’s (KSS), offering a 10.1% yield but a "F" risk score. Its payout ratio of 129% (dividends exceed earnings) is unsustainable without a turnaround. Similarly, CMB.TECH NV (CMBT)’s 65% yield is a red flag—it likely reflects collapsing share prices, not dividends.

The Strategic Edge: Balance and Diversification

My portfolio approach hinges on diversification and sector weighting:
- Utilities & Telecom: AT&T (T) at 4.2% offers stability with its debt reduction (down to $123B from $177B in 2021) and fiber growth.
- Defensive Sectors: Coca-Cola (KO) at 2.88% provides a “safety net” with a 20% profit margin and 63-year dividend growth streak.
- High-Yield Selects: Allocate 20–30% to top-tier picks like WU, WHR, and MO, while avoiding extreme yields (>10%) without clear fundamentals.

Conclusion: The Calculated Gamble

The case for buying these high-yield stocks is twofold:
1. Income Potential: A $100,000 investment in Western Union ($WU) would generate ~$9,200 annually, far outpacing the S&P 500’s average dividend yield of 1.2%.
2. Growth Anchors: Companies like Whirlpool (WHR) and Altria (MO) are not just paying dividends—they’re investing in strategic areas (digital payments, smoke-free products) to future-proof their cash flows.

However, risks remain. Investors must prioritize payout ratios below 100%, dividend growth consistency, and sector diversification. For every Western Union or Whirlpool, there are traps like CMBT or Kohl’s.

The verdict? These high-yield stocks are worth buying—if you pick the right ones. My portfolio is 25% allocated to WU, WHR, and MO, balanced with safer Aristocrats like Franklin Resources (BEN) at 7.25%. The returns are worth the disciplined risk.

In a world hungry for income, these stocks offer a lifeline—but only for those who tread carefully.

Data as of April 2025. Past performance does not guarantee future results.

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