The average dividend yield in the S&P 500 Index remains low at 1.3%. As a result, income investors should focus on higher-yielding securities if they want additional income from their stock portfolios.

One of the biggest benefits of investing in dividend stocks is the magic of compounding. Over time, investors can generate outsized returns through reinvesting dividends.

The following 3 high dividend stocks have yields above 5%, and will compound dividends for shareholders over the long run.

United Parcel Service (UPS)

United Parcel Service, founded in 1907 and headquartered in Atlanta, GA, is a logistics and package delivery company that offers services including transportation, distribution, ground freight, ocean freight, insurance, and financing. Its operations are split into three segments: US Domestic Package, International Package, and Supply Chain & Freight.

UPS announced it increased its quarterly dividend by one penny to $1.63 on January 30th, 2024, marking its 15th consecutive annual increase.

On January 30th, 2025, UPS reported fourth quarter 2024 results for the period ending December 31st, 2024. For the quarter, the company generated revenue of $25.3 billion, a 1.5% year-over-year increase. The U.S. Domestic segment (making up 68% of sales) saw a 2.2% revenue increase, with International also posting a 6.9% revenue increase, while Supply Chain Solutions saw a 9.1% decrease. Adjusted net income equaled $2.75 per share, up 11.3% year-over-year.

The company announced it is reducing its largest customer’s volume by over 50% by H2 2026, insourced 100% of its UPS SurePost product, and is redesigning its end-to-end process to deliver $1 billion in savings.

Future growth will be driven organically, as well as through acquisitions. For example, on July 22nd, 2024, UPS announced it agreed to acquire Estafeta, a Mexican express delivery company, expanding its international presence. On January 8th, 2025, the company completed its acquisition of Frigo-Trans, a complex healthcare logistics provider in Germany.

UPS stock currently yields 5.7%.

Verizon Communications (VZ)

Verizon Communications was created by a merger between Bell Atlantic Corp and GTE Corp in June 2000. Verizon is one of the largest wireless carriers in the country. Wireless contributes three-quarters of all revenues, and broadband and cable services account for about a quarter of sales. The company’s network covers ~300 million people and 98% of the U.S.

On January 24th, 2025, Verizon announced fourth quarter and full year results. For the quarter, revenue grew 1.7% to $35.7 billion, which beat estimates by $360 million.

Adjusted earnings-per-share of $1.10 compared favorably to $1.08 in the prior year and was in-line with expectations. For the year, grew 0.6% to $134.8 billion while adjusted earnings-per-share $4.59 compared to $4.71 in 2023.

For the quarter, Verizon had postpaid phone net additions of 568K, which was better than the 449K net additions the company had in the same period last year. Retail postpaid net additions totaled 426K. Wireless retail postpaid phone churn rate remains low at 0.89%. Wireless revenue grew 3.1% to $20.0 billion while the Consumer segment increased 2.2% to $27.6 billion.

One of Verizon’s key competitive advantages is that is often considered the best wireless carrier in the U.S. This is evidenced by the company’s wireless net additions and very low churn rate. This reliable service allows Verizon to maintain its customer base as well as give the company an opportunity to move customers to higher-priced plans. Verizon’s 5G service coverage area gives it an advantage over other carriers.

VZ has increased its dividend for 20 years and shares currently yield 6.8%.

Realty Income (O)

Realty Income is a retail real estate focused REIT that has become famous for its successful dividend growth history and monthly dividend payments.

Today, the trust owns thousands of properties. Realty Income owns retail properties that are not part of a wider retail development (such as a mall), but instead are standalone properties. This means that the properties are viable for many different tenants, including government services, healthcare services, and entertainment.

Realty Income Corporation (O) reported third-quarter 2024 earnings, with EPS at $0.30, missing estimates by $0.06, but revenue of $1.27 billion, a 26% year-over-year increase, beat expectations by $10.01 million. Net income for common shareholders was $261.8 million. The company generated $915.6 million in Adjusted Funds from Operations (AFFO), or $1.05 per share.

Future growth will be fueled largely by new property acquisitions. In the most recent quarter, Realty Income invested $740.1 million in new properties, achieving an initial average cash yield of 7.4%, while maintaining a portfolio occupancy of 98.7%.

The growth that the REIT is experiencing has been very steady, coming almost every year at a mid-single digits CAGR. As a result, the REIT has been able to grow its dividend for 27 years and is today a Dividend Aristocrat. Shares of Realty Income are currently yielding 5.9%.

Disclosure: No positions in any stocks mentioned

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Bob Ciura has worked at Sure Dividend since October 2016. He oversees all content for Sure Dividend and its partner sites. Bob received a Bachelor’s degree in Finance from DePaul