High-Yield Dividend Stocks for December 2025: Secure Income in a Volatile Market

In a market marked by macroeconomic uncertainty and sector-specific volatility, income-focused investors are increasingly turning to high-yield dividend stocks as a bulwark against risk. As of December 2025, sectors like energy, telecom, REITs, and BDCs offer compelling opportunities for investors seeking both capital preservation and reliable cash flow. This analysis identifies undervalued equities across these sectors, supported by granular financial metrics and industry trends.

Energy: Leveraging Production Growth and LNG Expansion

The energy sector remains a cornerstone for high-yield dividends, with Barings BDC (BBDC) leading the pack at an 11.73% yield. Kinder Morgan (KMI) and Dominion Energy (D) also stand out, each offering a 4.3% yield. These yields are underpinned by robust sector fundamentals: according to the ATB Capital Markets Fall 2025 Energy Sector Survey, 88% of exploration and production (E&P) companies plan to grow production by 5% over the next 12 months. Gas-weighted producers are particularly well-positioned, as LNG export capacity expansions are expected to gain regulatory approval before 2027. However, energy services firms face margin pressures, highlighting the need to focus on E&P and utility-like energy stocks for stability.

ETF performance further validates the sector's appeal. The Industrial Select Sector SPDR Fund (XLI) surged 16.5% in 2025, while the Utilities Select Sector SPDR Fund (XLU) gained 20.9%, driven by AI-driven energy demand. These trends suggest that energy stocks with strong cash flow generation and low dividend risk-such as Altria Group (MO), which offers an 8.0% yield with a Dividend Risk Score of A-are prime candidates for long-term income portfolios.

Telecom: Steady Yields Amid Digital Transformation

Telecom remains a defensive sector, with AT&T (T) delivering a 4.3% yield. The company's focus on wireless and internet services aligns with the sector's broader growth trajectory. The Communication Services Select Sector SPDR Fund (XLC) gained over 20% in 2025, fueled by demand from tech giants like Meta and Alphabet. While telecom yields are modest compared to energy or BDCs, the sector's resilience in a high-interest-rate environment makes it a valuable diversifier. Investors should prioritize companies with strong balance sheets and recurring revenue streams, as dividend cuts in this sector are rare.

REITs: Navigating Volatility with High-Yield Subsectors

REITs offer a unique blend of income and diversification, with the FTSE Nareit All Equity REITs Index gaining 2.9% year-to-date in 2025. Healthcare REITs and non-U.S. REITs have outperformed, with Diversified Healthcare Trust (DHC) surging 82.38% in one year. W.P. Carey (WPC) and Medical Properties Trust (MPW) provide yields of 5.3% and 6.3%, respectively, while Mid-America Apartment Communities (MAA) offers a 4.5% yield.

Despite volatility in industrial and lodging subsectors, J.P. Morgan Research projects REIT earnings growth of 3% in 2025, accelerating to 6% in 2026. ETFs like the Schwab U.S. REIT ETF (SCHH) have benefited from expanded telecom tower REIT exposure, while the iShares Mortgage Real Estate ETF (REM) attracted attention despite a -2.24% return in December 2025. Investors should focus on REITs with strong tenant credit quality and long-term lease structures to mitigate interest rate risks.

BDCs: High-Yield Alternatives in Private Credit

Business development companies (BDCs) continue to outperform traditional income assets, with the Cliffwater BDC Index yielding 10.65% as of November 28, 2025. Barings BDC (BBDC), BlackRock TCP Capital (TCPC), and Capital Southwest (CSWC) are top performers, offering yields above 10%. Golub Capital BDC, Inc. (GBDC) reported an adjusted net investment income (NII) of $0.39 per share in Q4 2025, matching its distribution and reflecting a 10.4% ROE.

While BDC yields have declined slightly to 10.5% in Q3 2025, the sector remains a high-yield haven. The VanEck BDC Income ETF (BIZD) provides diversified access to this space, reducing company-specific risks. However, investors must monitor macroeconomic headwinds, including narrowing spreads and regulatory pressures, which could impact future performance.

Conclusion: Balancing Yield and Risk in a Volatile Market

For income-focused investors, December 2025 presents a rare alignment of high-yield opportunities across energy, telecom, REITs, and BDCs. Energy and BDCs offer the most aggressive yields, while telecom and REITs provide defensive characteristics. Key considerations include:
- Energy: Prioritize E&P and utility-like stocks with strong production growth.
- Telecom: Focus on companies with recurring revenue and low dividend risk.
- REITs: Target healthcare and non-U.S. subsectors with resilient demand.
- BDCs: Diversify exposure through ETFs to mitigate concentration risks.

As always, investors should balance yield with financial health, using metrics like dividend risk scores and earnings growth projections to identify sustainable income streams. In a volatile market, these sectors offer a roadmap to secure, compounding returns.