Why High-Yield Dividend Stocks Still Outperform in the Long Run
For over a century, stocks have outpaced every other asset class in generating wealth. Among the many strategies available to investors, holding high-quality dividend-paying stocks remains one of the most proven and effective methods for long-term success.
Dividend-paying companies usually display strong fundamentals—steady profits, time-tested business models, and transparent growth plans. But what sets them apart is their consistent ability to outperform non-dividend payers, especially during volatile markets.
According to research from Hartford Funds and Ned Davis Research, between 1973 and 2024, dividend stocks returned 9.2% annually, outperforming non-dividend payers, which returned just 4.31%. Even better, they did so with less volatility than the S&P 500.
Still, not all dividend stocks are created equal. Some offer ultra-high yields—defined as four times the S&P 500 average—that deserve deeper analysis. Below are three such ultra-high-yield dividend stocks, offering an average yield of 6.72%, that make compelling additions to any portfolio this August.
1. Enterprise Products Partners (NYSE: EPD) – 7.03% Dividend Yield
Enterprise Products Partners is an energy infrastructure powerhouse and a model of dividend consistency. The company has increased its distribution for 27 consecutive years and currently offers a generous 7.03% yield.
Despite challenges in the global energy sector, including Middle East tensions and uncertainties surrounding U.S. trade policy, Enterprise’s business model shields it from much of the volatility. That’s because it operates as a midstream energy company, specializing in the transportation and storage of oil and natural gas.
Its long-term, fixed-fee contracts ensure predictable cash flow, regardless of energy prices. This financial stability enables Enterprise to fund expansion projects—like its $5.6 billion investment in liquified natural gas infrastructure—without overextending financially. All these projects are slated to be cash-flow accretive by 2026.
Even better, the stock is attractively valued, trading at just 10.5 times forward earnings, aligning with its five-year average and well below market highs. For investors seeking income and stability, Enterprise is hard to overlook.
2. Pfizer Inc. (NYSE: PFE) – 7.39% Dividend Yield
Pfizer may have fallen from recent pandemic highs, but this pharmaceutical leader still presents a compelling income opportunity. Following a pullback in share price, Pfizer now yields a robust 7.39%, and management remains confident in the sustainability of its dividend.
Much of the recent weakness in Pfizer’s stock stems from the decline in COVID-related sales. In 2022, its vaccine and antiviral drug (Comirnaty and Paxlovid) delivered over $56 billion in combined revenue. By 2024, that number fell to $11 billion and may drop further.
However, excluding pandemic-related revenue, Pfizer’s core business has been growing steadily. Between 2020 and 2024, total sales—including COVID products—rose 52%, underscoring the company’s evolution into a more diversified pharmaceutical player.
The $43 billion acquisition of Seagen in December 2023 was a major strategic move, adding over $3 billion in annual sales and significantly enhancing Pfizer’s oncology drug pipeline.
Moreover, Pfizer is focused on cost optimization, aiming to save $4.5 billion by year-end through efficiency improvements and manufacturing streamlining—bolstering future earnings.
From a valuation standpoint, Pfizer trades at just 7.5 times forward earnings, representing a 26% discount to its five-year average. That makes this high-yield stock an attractive long-term investment.
3. Realty Income (NYSE: O) – 5.75% Dividend Yield
Realty Income, known as “The Monthly Dividend Company,” is a top-tier real estate investment trust (REIT) with an exceptional track record. Over the past 30 years, the company has raised its dividend 131 times and currently yields an impressive 5.75%.
Concerns about retail-related REITs may be warranted amid tariff uncertainties and shifting consumer trends. However, Realty Income’s portfolio is uniquely resilient. As of Q1 2025, it owns over 15,600 commercial real estate properties, with 91% of rental income sourced from recession-resistant tenants like grocery stores, drugstores, and auto service chains.
Additionally, Realty Income boasts long-term leases, with a weighted average term of 9.1 years, and consistently maintains high occupancy rates due to its disciplined tenant selection process.
The stock is also undervalued, trading at 12.4 times 2026 estimated cash flow, which is a 22% discount to its five-year average multiple. For income-focused investors, Realty Income provides a rare combination of monthly dividends, portfolio stability, and upside potential.
Final Thoughts: A Golden Opportunity for Income Investors
Each of these ultra-high-yield dividend stocks—Enterprise Products Partners, Pfizer, and Realty Income—offers a compelling mix of income, stability, and growth potential. With average yields above 6.7%, they stand out as smart buys for August, especially for investors seeking passive income in uncertain markets.
As always, ensure these investments align with your financial goals and risk tolerance, but if you’re looking to add reliable income-generating assets to your portfolio, these three companies deserve a close look.
Reference : Sean Williams