If you're looking for high-yield dividend stocks, there's certainly no shortage of them right now. Interest rates are elevated. Dividend yields have followed suit.
Finding a dividend stock you can hold confidently for a decade or more, however, is a different story. Too many of them seem to come with a risky downside, including the prospect of interrupted payouts or dividend cuts. You'll want to exercise above-average caution if you're shopping around for some new income-producing names.
Or, you can start your search with one or more of the following three low-risk, high-yield dividend stocks.
W.P. Carey
W.P. Carey (NYSE: WPC) isn't exactly a household name, but there's a chance you're regularly benefiting from its business without even realizing it.
That's because it owns a wide array of industrial properties that it leases to enterprises that would rather rent than own their own land and buildings. Its tenants range from pharmaceutical companies and schools to grocery stores and automotive parts manufacturers -- and more -- in the U.S. and abroad.
W.P. Carey is legally structured as a real estate investment trust (or REIT), in fact, which makes it even more cost-effective to pass along rent-based profits to shareholders.
Commercial rental real estate can be a risky business for a variety of reasons. Chief among them is cyclical economic weakness that crimps its tenants' ability to make their monthly rent payments, or crimps demand for commercial real estate altogether. Yet, W.P. Carey is still expected to continue paying on the loans it has taken out to acquire land and buildings. To this end, Carey recently cut its dividend about 20%.
In addition, most of this REIT's renters are bigger companies that are capable of withstanding economic challenges, W.P. Carey is also a net-lease REIT. That means the renter is wholly responsible for ever-changing and unpredictable costs like taxes, insurance, and maintenance. This REIT's leases also inherently include ongoing rental-rate increases, so it's collecting payments that more or less reflect prevailing rent rates at any given time.
That doesn't mean W.P. Carey is a risk-free investment prospect. But by and large, it's a dependable dividend payer and dividend grower. You'd be stepping in at a healthy forward-looking dividend yield of nearly 5.7%.
Enbridge
W.P. Carey's yield of just under 5.7% is good, but Enbridge 's (NYSE: ENB) is even better at 6.7%. It's also even more reliable in terms of dividend growth, having upped its annual payments for 29 consecutive years.
That may be surprising given that Canada's Enbridge operates within the oil and gas sector. Crude oil and natural gas prices are all over the map, and have been particularly volatile during the past decade. These wild swings can make it tough to be in the energy business .
Enbridge's top and bottom lines aren't actually tightly tethered to gas and oil prices. That's because it's predominantly a pipeline and storage facility operator, with more than 18,000 miles' worth of pipelines spanning Canada and the United States. It simply collects a toll for the oil and gas it delivers, regardless of the price of that oil and gas. Its only concern is consumption of natural gas and crude oil, which is about as strong now in the U.S. as it's been since the late 1990s.
U.S. Oil Consumption data by YCharts.
That's one of the key reasons that Enbridge's revenue and earnings have stayed far more consistent and reliable than crude oil and natural gas prices have.
This doesn't mean there won't come a time when the world just doesn't need gas or oil. That time is well down the road, though. Goldman Sachs predicts oil consumption will continue growing all the way through 2035, and even after that peak we'll still be using plenty of it beyond 2040. We'll also still need a means of getting it from point A to point B.
That's what Enbridge does, handling nearly one-third of the crude oil produced in North America, and facilitating 40% of oil imports into the U.S.
Verizon
Finally, add U.S. telecom powerhouse Verizon Communications (NYSE: VZ) to your list of high-yield dividend stocks you can buy and hold for a decade.
It's clearly not a growth stock. Anyone who needs or wants wireless phone service already has it. Landline phones are also a shrinking business. Any growth Verizon is going to achieve will largely be driven by U.S. population growth and by poaching customers from rival service providers that are also trying to steal Verizon's customers for themselves. The only real high growth driver in Verizon's toolbox is its enterprise networking offering, and even that opportunity is somewhat limited.
However, a lack of enormous growth potential doesn't mean Verizon won't continue paying and growing its dividend. The company's still got many ways to grow its business and its resulting, dividend-driving earnings.
Think about it. People are effectively addicted to their mobile phones, to the point of feeling uncomfortable without them. Data from Reviews.org indicates the average American checks their phone 144 times per day, staring at their screen for a daily average of four hours and 25 minutes. People aren't simply going to stop using them now.
In the meantime, Verizon is growing its business by acquiring similar ones, including competitors. Just last week, it announced it would be acquiring Frontier Communications , bringing its fiber optic broadband business' 2.2 million customers into the fold.
It won't come cheap. Verizon is shelling out $20 billion in cash to buy the company. It's worth it, though. Verizon believes there's at least half-a-billion worth of annual savings that can be found by combining the two organizations' fiber optic connectivity operations, so the Frontier purchase should eventually pay for itself. The deal also gives Verizon more commanding control of this sliver of the telecom market, adding competitiveness in a different way.
These are just anecdotal examples of what Verizon is willing and able to do remain in position to continuing paying and growing its dividend. The thing is, it's doing them, and doing them well.
Again, Verizon's never going to be a high-growth stock. But it's a dividend machine, currently yielding 6.6% thanks to 18 consecutive years of annual payout growth -- a streak that isn't likely to be snapped anytime soon.
Should you invest $1,000 in W.P. Carey right now?
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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Enbridge and Goldman Sachs Group. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy .
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