2 High-Yield Dividend Stocks With Massive Upside to Buy Now

There are many reasons investors flock to dividend stocks. Most of these companies pay out quarterly and offer reliable income. Reinvesting dividends is also one of the best ways to generate wealth in the long term. And companies that pay dividends are often more stable and financially sound, offering some resistance to economic downturns.

With all those factors in mind, here are two high-yield dividend stocks with upside potential and worth considering now.

A spreading real estate empire

Realty Income (NYSE: O) is a real estate investment trust (REIT) and as such is a partner to some of the world's leading companies. It invests in commercial real estate with a portfolio of over 15,540 properties primarily in the U.S. and the United Kingdom.

It's a more stable business than many investors realize with 90% of total rent providers being resilient to economic downturns and isolated from e-commerce pressures -- important in keeping long-term customers.

Dividends remain core to the company mission. It has dished out 108 consecutive quarters with a dividend increase and has averaged a 4.3% compound annual growth rate (CAGR) in its payout since 1994. Best of all, after its latest increase, the yield sits at a generous 5%.

Chart source: Realty Income.

And there's more to be optimistic about beyond its high-yield dividend. Realty Income still has pathways for growth, including expanding into other verticals within the U.S. such as data center development.

The REIT also has plenty of opportunities in Europe outside of its core U.K. portfolio. Management estimates it has a $14 trillion total addressable market globally for net lease properties, and it has identified nearly $60 billion of high-quality acquisition opportunities.

Realty Income offers investors a 5% dividend yield, growth opportunities in the U.S. and Europe, and a stable business with recession-resilient properties -- a top dividend stock with upside.

EV woes as Ford Pro goes

Ford Motor Company (NYSE: F) is an intriguing dividend stock for many reasons. It is cheap, trading at a modest 10.8 price-to-earnings ratio (P/E), and it has a robust 5.5% dividend yield with a history of lucrative supplemental payouts when cash is aplenty. The upside for Ford and its investors comes on two fronts: its model e electric vehicle (EV) division, and its Ford Pro segment.

Starting with Ford Pro, the company has developed its commercial division into a blossoming high-margin growth business. In the second quarter, the division generated $2.6 billion in earnings before interest and taxes (EBIT) compared to Ford Blue, its traditional gasoline-powered vehicle business, which generated only $1.1 billion.

Ford Pro's EBIT margin checked in at 15.1% compared to Ford Blue's 4.4%, and the division grew its revenue by 9% during the second quarter, which was three times the growth rate of wholesales -- suggesting solid pricing power.

While Ford Pro is blossoming and offers upside as it grows to be a bigger part of the overall business, its model e division, responsible for its EVs, is looking like the opposite. Management estimates losses could reach $5.5 billion in 2024.

So Ford has delayed or canceled as much as $12 billion in EV investments to try to curb these significant losses. Financials will also improve as battery costs continue to come down and scale increases as EVs slowly take more market share from traditional vehicles. If the automaker can simply break even on its EV division, it will significantly boost its bottom line.

Buy now

Both companies offer a juicy 5%-plus dividend yield, along with upside potential if you plan to hold for the long term. Realty Income has plenty of growth opportunities in the U.S. and in Europe, and Ford can drastically improve its bottom line by cutting losses on its EVs and focusing on its booming Ford Pro business.

Should you invest $1,000 in Ford Motor Company right now?

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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.