Dividend investing offers a reliable path to passive income and long-term wealth building, especially when stock prices stagnate or decline. Regular payouts provide cash flow regardless of market direction, and reinvesting dividends historically drives much of total return.
High-yield stocks, however, carry risks. Yields above 5% often signal underlying issues—declining earnings, high debt, or sector-specific pressures. Some companies cut dividends when cash flow weakens, eroding both income and principal. Investors must look beyond the yield to assess sustainability, payout ratios, and business strength.
That said, not all high yields are traps. The three dividend stocks below each offer yields above 5%, so let’s dive in to see if they are worth buying.
Realty Income (O)
Realty Income (NYSE:O) stands out as a premier real estate investment trust (REIT) focused on single-tenant retail properties. The company leases space to essential retailers like dollar stores, pharmacies, and convenience chains under long-term net leases. These contracts require tenants to cover taxes, insurance, and maintenance, delivering highly predictable revenue.
In the first half of 2025, occupancy remained strong at 98%, reflecting the resilience of its tenant base even in economic slowdowns. Management plans to invest $5 billion in new acquisitions this year, and guides for AFFO in the range of $4.24 to $4.28 per share for 2025. The dividend is paid monthly and O bills itself as “The Monthly Dividend Company,” having created the strategy from its founding in 1969.
The REIT has increased the payout for 112 consecutive quarters — a track record spanning three decades. With a payout ratio around 75% of funds from operations and an investment-grade balance sheet, the 5.5% forward yield appears secure.
O stock trades at roughly 14 times adjusted funds from operations, with the stock sitting below its historical average, offering value for income-focused investors. For those seeking consistent, inflation-protected cash flow without the volatility of growth stocks, Realty Income serves as a cornerstone holding.
Enterprise Products Partners (EPD)
Enterprise Products Partners (NYSE:EPD | EPD Price Prediction) operates as a leading midstream energy partnership, owning an extensive network of pipelines, storage terminals, and processing plants. Unlike upstream producers exposed to oil and gas price swings, Enterprise earns the majority of its revenue — currently around 82% — from fixed-fee contracts. This structure provides stability even during commodity downturns.
The partnership has raised its distribution for 27 straight years, supported by strong cash flow coverage of 1.6 times in the most recent quarter. A $6.7 billion project backlog set to come online through 2027 should drive 4% to 5% annual distribution growth. At a forward yield of 6.9%, the payout remains one of the most reliable in the energy sector.
Valuation sits in line with peers at 10.8 times enterprise value-to-EBITDA. However, investors must accept the K-1 tax form — making it a more complicated tax situation — and potential energy sector volatility. For those comfortable with MLP mechanics and seeking high, growing income backed by critical infrastructure, Enterprise offers compelling long-term value.
Kenvue (KVUE)
Kenvue (NYSE:KVUE) was spun off from Johnson & Johnson (NYSE:JNJ) in 2023, and houses globally recognized consumer health brands including Tylenol, Neutrogena, Listerine, and Band-Aid. Despite a challenging post-IPO performance, with shares down about 15% from peak levels, the underlying business shows resilience.
Second-quarter results reported 3.2% organic sales growth, driven by pricing power and steady demand for everyday health and personal care products. Management reaffirmed full-year guidance, signaling confidence in the operating model.
The company initiated an annual dividend of $0.80 per share, covered more than twice by free cash flow. With a forward payout ratio of 48% and net debt-to-EBITDA of around 2 times, the balance sheet supports continued payouts.
Trading at 13 times forward earnings, the stock offers a 5.6% yield alongside a 7.1% free cash flow yield. Legal risks from inherited talc litigation remain a concern, though the core portfolio operates independently. Patient investors willing to look past near-term uncertainty can acquire a high-quality consumer staples name at a reasonable price.
Key Takeaway
The combination of these three stocks provides diversified exposure to real estate, energy infrastructure, and consumer health — all with yields exceeding 5%. Realty Income leads real estate and offers monthly reliability, Enterprise delivers high cash flow coverage, and Kenvue provides brand strength with growth potential. Together, they balance income, stability, and recovery upside.
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