The Best Ultra-High-Yield Dividend Stock to Invest $1,000 in Right Now

Key Points

• This ultra-high-yield stock has a 6.2% yield that is 4.5 percentage points higher than the healthcare average.

• The company has increased its dividend annually for 15 years.

• The dividend coverage is very strong at around 57%.

• 10 stocks we like better than Alexandria Real Estate Equities ›

There's more than one way to invest in the healthcare sector. In fact, if you are looking for dividend income, you'll probably need to consider your alternatives, given the sector's measly 1.7% average yield.

One option today is to look at out-of-favor drug makers, but there's another, more subtle choice to consider: Alexandria Real Estate (NYSE: ARE). And this healthcare-focused real estate investment trust's huge 6.2% dividend yield is just the start.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

What's going on with drugmakers?

A number of drug makers have very high yields today, including Pfizer (NYSE: PFE) and Bristol Myers Squibb (NYSE: BMY). They are perfectly fine companies, offering attractive yields of 6.9% and 5.2%, respectively, today. There's just one problem -- drug makers are in the hot seat with the government thanks to the change in administration.

Given that the healthcare sector has become even more politicized than usual, it is hard to predict where things go next. Now add in the fact that drugmakers also face the normal risk of patent protections on their drug discoveries ending, and you can see why investors might want to look elsewhere. But the patent cliffs that drugmakers are staring down highlight why Alexandria and its 6.2% yield is so attractive, relatively speaking.

What does Alexandria do?

Making drugs is an expensive affair, since drug companies have to find, develop, and get drugs approved. This expense isn't optional, given that the patent protection on new drugs is only available for a short period of time. Research and development is always taking place, and not just in the pharma niche of the healthcare industry. All of the R&D that's taking place across the entire healthcare sector has to be performed in some physical location. Alexandria is focused on owning those properties.

So the REIT is a bit tangential to the healthcare industry, but its business is almost completely dependent on the sector. And the most exciting part of the sector: research and development. (Note that Bristol Myers Squibb is the REIT's third largest tenant.)

However, investing in Alexandria helps bypass the lumpy nature of healthcare discoveries. That's because rent on its vital research space has to be paid regardless of the results of a company's research efforts.

Investors, however, are worried about Alexandria's business right now. The concern is not unrealistic, noting that occupancy levels fell from 94.6% at the start of 2025 to 90.8% at the year's halfway mark. A large tenant exit coupled with the company's efforts to refocus around its best properties is largely to blame. There could be a little more near-term volatility here, but the company remains the leader in the healthcare research property niche.

Then there's one more important fact. The dividend is on very solid ground. For starters, the funds from operations (FFO) dividend payout ratio was a very reasonable 57% or so in the second quarter of 2025. Office properties, the type Alexandria primarily owns, generally have higher operating costs, but that low payout ratio provides ample leeway for short-term adversity. And, on top of that, management is loudly proclaiming that it has a "top 10% credit rating ranking among all publicly traded U.S. REITs." In other words, it has a rock-solid balance sheet, too. The risk of a dividend cut seems rather low.

Buy Alexandria while the rest of Wall Street is selling

It can be hard to take a contrarian stance and buy when others are selling a stock. But in the case of Alexandria, there's a good reason to be positive about the long term. Not only is the company financially strong, but the properties it owns are vital to the healthcare industry's long-term success. And of course, the rent has to be paid regardless of how well, or poorly, a tenant's R&D efforts go.

Should you invest $1,000 in Alexandria Real Estate Equities right now?

Before you buy stock in Alexandria Real Estate Equities, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alexandria Real Estate Equities wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $670,781!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,023,752!*

Now, it’s worth noting Stock Advisor’s total average return is 1,052% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of September 8, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alexandria Real Estate Equities, Bristol Myers Squibb, and Pfizer. The Motley Fool has a disclosure policy.