The Federal Reserve’s 25 basis points rate cut at the end of October 2024 took interest rates below 5% for the first time since March 2023, and another rate a few weeks ago puts it as 4.5% as of writing. Treasury rates are already starting to decline. Short-term rates have declined significantly in the past few months, and long-term treasuries — while their yields have actually increased — will likely start declining if rate cuts keep their current pace.

No treasury bills are yielding more than 5% right now:

• 20-Year Treasury: 4.85%
• 30-Year Treasury: 4.76%
• 10-Year Treasury: 4.59%
• 7-Year Treasury: 4.52%
• 5-Year Treasury: 4.45%
• 3-Year Treasury: 4.37%
• 2-Year Treasury: 4.35%
• 8-Week Treasury: 4.34%
• 3-Month Treasury: 4.32%
• 4-Week Treasury: 4.31%
• 6-Month Treasury: 4.31%
• 52-Week Treasury: 4.24%

As such, I think investors are going to be increasingly yield-hungry over the next few years if rate cuts continue. The Trump administration will likely keep rates low and will encourage faster rate cuts.

So where do investors go when treasury yields and interest rates are low? Stocks. Specifically, high-yield dividend stocks. Investment-grade corporate bonds also become attractive, but for most retail investors, corporate bonds — around 86% of them — are not accessible.

24/7 Wall St. Key Points:

• High-yield dividend stocks can compound your gains much more effectively in the long run.
• These stocks have high dividend yields that are likely to stick around.
• They also have decent upside potential going forward. Here’s another article of mine that discusses the three highest-yielding dividend stocks on the Dow Jones.

Here are five high-yield dividend stocks to look into before investors start seeking more yield. Most of them are changing hands at a discount, so there’s solid upside potential, too.

MPLX LP (MPLX)

MPLX (NYSE: MPLX) is a Master Limited Partnership (MLP) that is majority-owned by Marathon Petroleum (NYSE: MPC). This means when you buy MPLX, you’re a “unitholder” who holds partnership units instead of shares. Also, the “dividends” being received are actually cash distributions. The pros are that these dividends are not taxed upon being received and are deferred. There’s some bureaucracy involved when you buy into MPLX and discussing those would take us out of the scope of this article, so I recommend that you consult with a tax advisor if you’re looking to buy a significant amount of this stock.

For this article, we’re going to refer to MPLX as a stock and the cash distributions as dividends. Many brokers do just that.

What MPLX does is operate a vast network of midstream energy infrastructure across the United States. The company runs two main segments: Logistics and Storage (L&S), which handles crude oil and refined product pipelines, and Gathering and Processing (G&P), which manages natural gas and natural gas liquids infrastructure. The reason I’m featuring the stock despite the tax reporting complications is the 8% dividend yield you’re getting here. I believe that’s more than worth the hassle.

The company’s financial performance supports this generous payout. In Q3 2024, MPLX reported:

• Net income of $1.037 billion
• Operating cash flow of $1.415 billion
• Distribution coverage ratio of 1.5x.

MPLX has also been one of the most consistent and stable stocks in the market. It is up 30.6% year-to-date, whereas most other high-yield dividend stocks have had trouble keeping up with the market.

Altria Group (MO)

Altria Group (NYSE: MO) is a tobacco company and Smokeable Products — which includes cigarettes and cigars — constitute approximately 87% of its total revenue and made $5.54 billion ($4.65 billion after excise taxes) in revenue in Q3 2024.

Even after the recent increase in its stock price, it is down by 26% from its 2017 highs, and the stock trades at a bargain valuation of just nine times earnings. This is obviously because investors are worried about the trends regarding the cigarette market. Younger people are especially averse to cigarettes and prefer vaping instead.

The numbers actually tell a concerning story. Altria’s smokeable products segment has seen significant volume declines, with domestic cigarette shipments down 11.5% in Q3 2024. This decline is actually steeper than the industry average, and the trend seems to be accelerating due to economic pressures and competition from illicit e-vapor products.

However, Altria is making a transition toward smoke-free products, and it’s making good progress on that front. U.S. smoke-free volumes are expected to grow by at least 35% through 2028 from its 2022 base. The recent acquisition of NJOY has also given Altria access to FDA-authorized vapor products.

Regardless, Altria’s overall revenue has remained very sticky and so have the profits. I expect the dividends here to remain sticky as well and alternative products to cigarettes, along with a transition to countries where smoking is still prevalent, will likely keep sales stable going forward.

LyondellBasell (LYB)

LyondellBasell Industries (NYSE: LYB) is one of the world’s largest multinational chemical companies. The stock has been one of the most consistent and stable in the past decade and — except for the COVID crash — has been trading within a well-defined band of $75 to $115.

That was until October of this year. The stock has declined some 23% since October due to polyolefins operating rates being hampered by elevated U.S. propylene costs. In addition, net income of $573 million was down from $747 million in the year-ago quarter and revenue declined by 2.9% year-over-year to 10.3% billion. Both the top line and the bottom line missed estimates.

It is now trading at $74 per share and is below even some of the more bearish price targets.

I believe now is a good time to buy since it is changing hands at around just eleven times earnings and has a dividend yield of 7.21%. LyondellBasell Industries will likely turn the corner in the coming years — financially speaking — and the stock should follow suit. LYB has seen 13 consecutive years of dividend increases and the recent speedbump shouldn’t put an end to that.

Now, analysts project a 17.7% decrease to $33.2 billion in 2025 due to its planned refining segment exit, but profitability will actually increase since that has been a loss-making segment and LyondellBasell is turning that into a sustainable project that will steer the company into growth starting in 2026. Thus, I think dividends will remain juicy going forward. The solid upside potential here sweetens the deal significantly.

Realty Income (O)

After the stock market itself, the housing market has probably been scrutinized the most in the past couple of years. Investors are still distrustful of real estate after 2008 and the wounds haven’t fully healed. But I do think that the fear is overblown than they really are.

Real estate prices have trailed most equities and have moderated quite a bit since late 2022. U.S. real estate is still cheap when you compare it to prices in Canada and elsewhere in the OECD nations, so I think the constant fears here have kept things from going out of control.

In my opinion, this bearishness has spilled over into Realty Income (NYSE: O) and its stock and it offers a better bang for your buck than most other stocks in the market right now. Commercial real estate has been plagued by people fearing a work-from-home trend that never really materialized in a big way; demand has thus remained stable. It will likely remain as so in the coming years.

Franklin Resources (BEN)

Franklin Resources, also known as Franklin Templeton (NYSE: BEN) is a global investment company. It doesn’t directly acquire or take large ownership in stocks, but Franklin Templeton manages money on behalf of other investors, mostly through ETFs and mutual funds. The latter has historically been their core business.

BEN stock has had a rough decade and the stock has been consistently falling since 2014 with only temporary swings to the upside. Recent financial reports haven’t been forgiving, either. Franklin Resources posted a net loss of $84.7 million in Q4 2024 compared to its $295.5 million profit in the same quarter of 2023. This poor performance stems largely from a $389.2 million impairment charge related to its Western Asset Management unit.

The challenges run much deeper than just one bad quarter, however. The company continues to face significant outflows of investor money, with preliminary long-term net outflows of $13 billion reported in November 2024. Western Asset Management has been particularly problematic and actually accounts for $12 billion of these outflows. Fund performance also remains a serious concern. Only 48% of the company’s assets under management are performing above peer medians on a one-year basis, while the three-year and five-year metrics don’t look much better at 60% and 43% respectively. All these negatives are why BEN stock is the last one on this list.

All that said, I still think it’s a buy. Most of the challenges that have caused Franklin Templeton to miss targets are temporary in nature, and I think they can be resolved in the coming years. The current valuation also looks quite attractive. The stock trades at just 8-9 times earnings, and you’re getting a 6.2% dividend yield as the company turns a corner. BEN stock has only traded this low during the Great Recession and more recently during COVID, so I think the upside potential is worth the downside risk here.

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