Two Stocks Offering Outsized Yields That Actually Make Sense for Income Investors

Why These High-Dividend Payers Deserve Your Attention

When bond yields are sliding across the board, finding quality companies willing to distribute substantial cash to shareholders becomes increasingly attractive. Two standouts in the current market are Verizon Communications and Upbound, both offering compelling payouts that warrant serious consideration for income-focused portfolios. But understanding what makes each tick—and what risks come with that generosity—is essential before committing capital.

The Telecom Powerhouse: Verizon’s Steady 7% Payout

Verizon Communications commands attention with a 7% dividend yield, the highest among Dow Jones Industrial Average constituents. Serving 146.1 million consumer and business accounts across its wireless network, the company has become synonymous with reliable payouts.

The strength lies in consistency. Verizon just celebrated 19 consecutive years of dividend increases, signaling management confidence in the business’s cash-generating ability. The company’s normalized net margin has exceeded 10% for 11 straight years—a remarkable achievement in a competitive telecom landscape. At current valuations below 9 times trailing earnings and 8 times forward estimates, the stock also appears reasonably priced.

But here’s the catch: revenue growth remains underwhelming. Over the past 16 years, Verizon has failed to achieve 6% annual revenue expansion, with four years showing outright declines. Even with aggressive 5G rollout and infrastructure investments, analysts project only 1-3% annual revenue growth through the next four years. The company is essentially a mature cash cow rather than a growth engine.

The silver lining is sustainability. With a 58% trailing dividend payout ratio, Verizon has considerable cushion to maintain its streak of annual increases. For another 20 years if nothing derails. As long as smartphones remain ubiquitous—a safe assumption—Verizon’s distribution checks should keep arriving.

The Higher-Yielding Alternative: Upbound’s 8.8% Opportunity

If Verizon represents stability, Upbound represents the no-brainer option for aggressive income seekers willing to embrace volatility. Trading at an eye-watering 8.8% yield, the company (formerly Rent-A-Center before its 2023 rebranding) has been a challenging investment—shares have tumbled nearly 40% over the past year.

Yet the fundamentals tell a different story than recent price action suggests. The company operates 1,700 locations across North America in the lease-to-own furniture, electronics, and appliances space. More importantly, management has successfully diversified beyond its core business. The 2021 acquisition of Acima, a fintech platform enabling lease-to-own options for other retailers, added growth momentum. Brigit, a financial app with 12+ million users helping people build credit, provides additional revenue streams.

Revenue is expanding in the high single digits with improving profitability. The company has increased its dividend five times since reinstating distributions in late 2019 and has exceeded quarterly expectations consistently over the past 12 months.

The valuation screams opportunity: Upbound trades for just 4 times trailing adjusted earnings, with analysts forecasting double-digit earnings growth ahead. On an enterprise value basis, the forward P/E sits barely below 10.

Acknowledging the Elephant in the Room

This is where both investments demand respect for their limitations. Upbound’s primary vulnerability is its customer base—people at the lower end of the credit spectrum who bear disproportionate risk during economic downturns. A recession could severely impact demand for lease-to-own services and credit-building apps. Additionally, the company carries meaningful debt levels that amplify this risk.

Verizon’s challenge is entirely different but no less real: it exists in a mature market with limited growth catalysts. Investors accepting a 7% yield are essentially betting the company maintains its current trajectory, not that it will expand significantly.

The Bottom Line

Both stocks offer what could legitimately be called no-brainer income solutions in a lower-rate environment. Verizon appeals to conservative investors prioritizing stability and demonstrated commitment to shareholder returns. Upbound attracts those comfortable with higher risk in exchange for superior current yield and potential capital appreciation if the turnaround thesis proves correct.

The key is matching each investment to your risk tolerance and time horizon. Neither is suitable for everyone, but both offer genuine value for income-minded investors who understand what they’re buying.