3 Dividend Stocks With Yields Over 5%. Should You Buy?

"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."

"Realty Income (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."

Dividend investing provides passive income and supports long-term wealth building, with reinvested payouts driving much of total return. High yields above 5% often indicate risks such as declining earnings, high debt, or sector pressures, and some firms cut dividends when cash flow weakens. Investors should evaluate sustainability through payout ratios, funds from operations, and business strength. Realty Income is a single-tenant retail REIT with long-term net leases that shift taxes, insurance, and maintenance to tenants, 98% occupancy in H1 2025, a guided AFFO of $4.24–$4.28, a roughly 75% payout ratio, and a 5.5% forward yield paid monthly.

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