Core Viewpoint - High dividend yields, such as 10% or more, can attract income-focused investors but often indicate significant underlying risks associated with the company's financial health [1][2]. Group 1: High-Yield Dividend Stocks - A list of high-yield dividend stocks includes FS KKR Capital Corp. (17.39%), Dynex Capital, Inc. (14.77%), and AGNC Investment Corp. (13.36%) among others, with market caps of at least $2 billion [4][6]. - The dividend yield is calculated as annual dividend divided by stock price, meaning a stock's yield can appear attractive if its price has significantly dropped [5][7]. Group 2: Risks Associated with High-Yield Stocks - A payout ratio exceeding 100% indicates that a company is using its capital to maintain dividends, which is unsustainable and may lead to dividend cuts [5]. - Companies in cyclical sectors may rely on debt to fund dividends during downturns, increasing the risk of bankruptcy [5]. - Investors should assess a company's free cash flow (FCF) to ensure it can sustain high dividend payments, as insufficient cash generation is a red flag [7][8]. Group 3: Tax Considerations - Many high-yield stocks, such as REITs and BDCs, pay non-qualified dividends, which are taxed at higher marginal income tax rates compared to qualified dividends from established companies [9][10]. - It is advisable for investors seeking high yields to consider holding non-qualified stocks in tax-advantaged accounts to mitigate tax liabilities [9].

Core Insights - The current investment landscape is challenging, with major indices like the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average near all-time highs, leading to frothy valuations in popular stocks [2] - The real estate sector presents attractive opportunities for long-term investors, offering above-average dividends and significant growth potential [3] Company Analysis - **EPR Properties**: - A real estate investment trust (REIT) focusing on experiential properties such as movie theaters, ski resorts, and waterparks [4] - Despite uncertainties in the movie theater sector, box office revenues have been strong, and EPR is successfully finding investment opportunities [5] - The company anticipates a favorable environment for expansion as interest rates decline, with a $100 billion investable universe of properties available for growth [6] - EPR offers a 6.1% dividend yield and trades at approximately 11.2 times its 2025 funds from operations (FFO) guidance, presenting a potentially attractive entry point [7] - **Prologis**: - One of the largest real estate owners globally, with 1.3 billion square feet of rentable logistics space, including distribution centers and warehouses [8] - The company benefits from strong tenant relationships with major corporations like Amazon, Walmart, and FedEx, positioning it well to capitalize on e-commerce growth [8]