These 20 stocks pay the highest dividend yields in the market, ranging from 3.8% to 14%. But high yield comes with risk. We analyze which payouts are sustainable and which are yield traps waiting to snap shut.
A "yield trap" is a stock with an unsustainably high yield that is about to be cut. The high yield lures investors in, then the dividend cut causes both income loss AND a stock price drop. Here are the warning signs:
Dividend extremely safe. 25+ year track record, low payout ratio.
Dividend well-covered. Sustainable from free cash flow.
Some risk factors. Dividend could be cut in a downturn.
Elevated risk. Payout ratio stretched, cut is possible.
Mortgage REIT
Share Price
$10.20
Dividend Yield
14.0%
Payout Ratio
95%
Agency mortgage REIT investing in government-guaranteed MBS. Ultra-high yield but book value and dividends have declined over time. Best for traders and income-seekers who understand the risks.
Mortgage REIT
Share Price
$19.80
Dividend Yield
13.2%
Payout Ratio
92%
The largest mortgage REIT by assets. Similar to AGNC with high leverage and interest rate sensitivity. The dividend has been cut multiple times over the past decade, but current levels appear sustainable.
Tobacco
Share Price
$42.00
Dividend Yield
9.2%
Payout Ratio
80%
Marlboro cigarette maker with 55 years of consecutive dividend increases. Declining cigarette volumes offset by price increases and NJOY e-cigarette growth. Payout ratio is elevated but free cash flow comfortably covers the dividend.
Tobacco
Share Price
$35.50
Dividend Yield
8.8%
Payout Ratio
65%
Global tobacco giant with brands including Lucky Strike and Camel. Lower payout ratio than Altria provides more safety margin. International diversification reduces US regulatory risk.
Mining
Share Price
$10.50
Dividend Yield
8.2%
Payout Ratio
55%
World's largest iron ore producer based in Brazil. Variable dividend policy means payouts fluctuate with commodity prices. High yield reflects commodity risk and emerging market discount.
Midstream MLP
Share Price
$15.80
Dividend Yield
8.0%
Payout Ratio
60%
One of the largest midstream pipeline MLPs with 130,000 miles of pipelines. Distribution has been restored and is growing after a 2020 cut. Fee-based revenue provides steady cash flow. Note: K-1 tax form required.
Pipeline
Share Price
$42.00
Dividend Yield
7.2%
Payout Ratio
65%
Canadian pipeline giant transporting 25% of North American crude oil. 29 consecutive years of dividend increases. Regulated utility-like cash flows provide exceptional dividend safety for a high-yield stock.
Midstream MLP
Share Price
$28.50
Dividend Yield
7.0%
Payout Ratio
60%
The gold standard of midstream MLPs with 25 consecutive distribution increases. Conservative management maintains 1.7x coverage ratio. The most reliable high-yield investment on this list. Note: K-1 tax form.
Telecom
Share Price
$38.50
Dividend Yield
6.8%
Payout Ratio
55%
America's largest wireless carrier with the best network. 18 consecutive years of dividend increases. Mature business generates massive free cash flow. Limited growth but very safe income.
Telecom
Share Price
$17.50
Dividend Yield
6.5%
Payout Ratio
50%
Post-WarnerMedia spinoff, AT&T is a focused telecom company with a sustainable dividend. Free cash flow covers the payout 2x over. Fiber expansion and 5G growth provide modest upside.
Retail REIT
Share Price
$140.00
Dividend Yield
6.0%
Payout Ratio
85%
The largest mall REIT focusing on Class A properties. Premium malls are performing well post-pandemic. High payout ratio is normal for REITs. Risk: retail disruption continues long-term.
Diversified REIT
Share Price
$58.00
Dividend Yield
5.8%
Payout Ratio
80%
Diversified net-lease REIT with industrial, warehouse, and retail properties. 27 consecutive years of dividend increases. CPI-linked rent escalators provide built-in inflation protection.
Industrial
Share Price
$95.00
Dividend Yield
5.8%
Payout Ratio
95%
Dividend King with 65 years of increases, but payout ratio above 90% is concerning. Legal liabilities from PFAS chemicals weigh on finances. The streak may be maintained, but the margin of safety is thin.
Net Lease REIT
Share Price
$52.00
Dividend Yield
5.5%
Payout Ratio
75%
The Monthly Dividend Company with 29 years of consecutive raises and over 650 monthly payments. Triple-net leases to investment-grade tenants. The highest-quality high-yield stock on this list.
Tobacco
Share Price
$96.00
Dividend Yield
5.4%
Payout Ratio
75%
International tobacco company with the fast-growing IQOS heated tobacco system. No US cigarette exposure reduces regulatory risk. IQOS conversion from cigarettes drives volume growth in 100+ markets.
Gaming REIT
Share Price
$30.00
Dividend Yield
5.2%
Payout Ratio
75%
Owns Caesars Palace, MGM properties, and other experiential real estate. Triple-net leases with CPI-linked rent bumps. Gaming revenue has proven resilient through recent downturns.
Utility
Share Price
$47.00
Dividend Yield
4.5%
Payout Ratio
80%
Regulated electric and gas utility serving Virginia and the Carolinas. Predictable regulated returns fund steady dividend growth. The yield reflects the 2020 dividend reduction; current level is very well covered.
Technology
Share Price
$175.00
Dividend Yield
3.8%
Payout Ratio
65%
Enterprise technology and AI leader with 28 consecutive years of dividend increases. The Red Hat acquisition and AI consulting drive revenue growth. One of the few tech stocks with a meaningful yield.
Pharma
Share Price
$24.50
Dividend Yield
6.8%
Payout Ratio
95%
Pharmaceutical giant with a massive drug pipeline beyond COVID vaccines. Current yield is elevated due to post-pandemic stock decline. Payout ratio is stretched but management has committed to maintaining the dividend.
Pharma
Share Price
$51.00
Dividend Yield
5.0%
Payout Ratio
60%
Oncology and cardiovascular drug leader with strong pipeline. The 5% yield is well-covered by free cash flow with a comfortable 60% payout ratio. New drug launches should drive growth through the decade.
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Chasing the absolute highest yields is a recipe for disaster. Instead, blend high-yield stocks with different risk profiles. Here is a model portfolio yielding 6%+ with reasonable safety.
Blended Yield: 6.0% | $10,000 invested = $600/year income
All stocks rated High or Very High safety. No yield traps.
| Portfolio Yield | Investment Needed | Monthly Income | Risk Level |
|---|---|---|---|
| 3% (Conservative) | $400,000 | $1,000 | Low |
| 5% (Moderate) | $240,000 | $1,000 | Low-Medium |
| 6% (High Yield) | $200,000 | $1,000 | Medium |
| 8% (Aggressive) | $150,000 | $1,000 | High |
| 10%+ (Maximum) | $120,000 | $1,000 | Very High |
Rarely. Yields above 10% almost always carry elevated risk. Mortgage REITs (AGNC, NLY) can sustain double-digit yields for periods, but their dividends have declined over time. The only consistently safe yields above 7% are pipeline MLPs like Enterprise Products Partners. As a rule of thumb, be skeptical of any yield above 8% and deeply investigate anything above 10%.
High yields occur for three reasons: (1) The company pays out a large portion of earnings (tobacco, REITs), (2) The stock price has fallen sharply, inflating the yield (potentially a yield trap), or (3) The business generates extraordinary cash flow (pipelines, telecoms). Understanding WHY the yield is high tells you whether it is sustainable.
That is a personal decision. Altria, Philip Morris, and British American Tobacco are among the best dividend payers in history, with decades of massive income generation. Many ESG-focused investors exclude them. If you do own them, understand that declining cigarette volumes are partially offset by price increases and reduced-risk product transitions like IQOS.
REIT dividends are mostly taxed as ordinary income (up to 37% rate), though you get a 20% QBI deduction on the income. MLP distributions are tax-deferred return of capital until you sell, then taxed as capital gains. MLPs also issue K-1 forms instead of 1099s, which complicates tax filing. Consider holding REITs and MLPs in tax-advantaged accounts like IRAs.
SPYD (S&P 500 High Dividend ETF) yields around 4.5% and holds the 80 highest-yielding S&P 500 stocks. HDV (iShares High Dividend ETF) yields 4.0% with a quality screen. JEPI (JPMorgan Equity Premium Income) yields 7%+ using a covered call strategy. For maximum yield with quality, consider building a custom portfolio from the "High Safety" stocks on this list.