2 High-Yield Dividends to Buy and Hold Forever

Key Points

• Dividend stocks historically outperform non-dividend-paying stocks.

• REITs are a great way for income investors to load up on dividends.

• Ford turning its electric vehicles from money losers to moneymakers will significantly help its bottom line.

• 10 stocks we like better than Ford Motor Company ›

Dividend-paying stocks can be a popular investment option because they often combine incredibly healthy balance sheets with higher-than-average yields and reward investors with steady incomes. That can create a cushion against market downturns and aid in growing portfolios at a higher clip when reinvested.

But not all dividends (or dividend stocks) are created equal, and here are two that boast high dividend yields as well as growth: Realty Income (NYSE: O) and Ford Motor Company (NYSE: F).

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Diversification gives Realty Income an edge

Realty Income is a diversified real estate investment trust (REIT) with an amazing track record of raising its dividend as well as a big growth story that should intrigue investors. In fact, the company has increased its monthly dividend payment a staggering 131 times since becoming publicly listed in October 1994. Further, it has raised the payment in 111 consecutive quarters for over 30 consecutive years -- its current yield sits at a robust 5.5%.

One of the great things about Realty Income is that it has a strong balance sheet that enables the company to make billions of dollars of acquisitions annually. The company invests in development projects, acquires other REITs, buys properties in sale-leaseback transactions, and has even branched into new property types, such as data centers and casinos. In fact, Realty Income sees a staggering $14 trillion opportunity to invest in commercial real estate across the U.S. and Europe.

Another great thing about Realty Income is its well-diversified portfolio that has 1,630 clients representing 91 industries. Better yet, a little over 90% of the company's total rent is insulated from e-commerce pressures and/or largely resilient to economic downturns. This helps provide steady income that can be dished back to investors.

Realty Income has a combination of a strong balance sheet and a diversified portfolio of properties that should enable it to grow its dividend for years to come, helping investors grow their wealth slowly but surely.

Ford sees the auto industry is going electric

Ford is a global automaker that sells millions of vehicles annually in a long list of markets, and offers investors a healthy dividend yielding 5.1%, as well as a periodic supplemental dividend that only adds to investors' income. Ford also has upside as the automotive industry continues to drive toward electrification.

Ford F-150 Lightning. Image source: Ford Motor Company.

Ford can deliver upside to investors by reversing its unprofitable electric vehicle (EV) business into a profitable part of the company. Consider that in 2023 and 2024, Ford's Model-e unit, responsible for its EVs, lost $4.7 billion and $5.1 billion, respectively. Ford is doubling down on its efforts to produce profitable and more affordable EVs by investing $2 billion to modernize its Louisville Assembly plant and an additional $3 billion to build a new battery plant in Michigan. Ford is also reinventing its assembly line to produce vehicles more quickly and efficiently.

"Ford's announcement is very ambitious, because it includes both a new production process and a new vehicle," Patrick Anderson, founder of Michigan-based consulting firm Anderson Economic Group, told CBS MoneyWatch. "If they can actually pull off a production line that has 40% fewer workstations and 20% fewer parts, it will be worthy of the 'Model T moment' claim."

It's going to take time and massive effort, but if you believe Ford can and will eventually make profitable EVs, it leaves plenty of upside on the company's bottom line, and the fatter bottom line should lead to increased dividends over time.

What it all means for dividend investors

Not all dividends are created equal, but Ford and Realty Income both offer high-yielding dividends with the potential for additional upside in the form of stock price appreciation based on their growth. Realty Income offers stability through diversification, upside with a massive $14 trillion opportunity in real estate, and Ford has a very clear path to boosting its bottom line. Both companies are worth buying and holding long-term for income investors.

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Daniel Miller has positions in Ford Motor Company. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.