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The role of dividend-paying stocks in building long-term wealth can't be understated. Over the past century, dividends have consistently represented a substantial portion of total stock-market returns. Yet recent years have seen many high-yield stocks struggling to match the S&P 500's performance, due to the outperformance of a handful of tech heavyweights.

These market dynamics have created compelling opportunities in select dividend-paying companies. Specifically, the current environment has pushed some fundamentally sound businesses into value territory. Here's an overview of two ultra-high-yield dividend stocks that are top buys in 2025.

Tobacco giant adapts to changing times

Altria Group (NYSE: MO) knows a thing or two about longevity. Through two centuries of business evolution, the company has maintained its market dominance, with flagship brands like Marlboro. Right now, investors can grab shares at an attractive price point, thanks to broader market concerns about declining smoking rates.

Looking at the numbers, Altria's stock trades at just 9.87 times forward earnings, far below the S&P 500's multiple of 24.2. This bargain valuation tells an interesting story. While the market frets over traditional tobacco's future and some of Altria's past missteps (like its cannabis ventures), it's overlooking the company's growing success in products like oral tobacco and nicotine pouches.

Management isn't sitting still in the face of changing consumer habits. Their game plan centers on expanding the company's presence in alternative nicotine products. These new categories are already showing promise, complementing the still-profitable cigarette business with fresh growth opportunities.

The dividend story might be the most compelling part of Altria's investment case. It's yield of 7.8% stands head and shoulders above most S&P 500-listed companies.

Better yet, the payout ratio sits at a comfortable 66.9%, suggesting this generous dividend is built to last. For income seekers, that combination of yield and sustainability is hard to ignore.

Telecom leader positioned for recovery

Verizon Communications (NYSE: VZ) isn't just another phone company. As one of America's largest wireless carriers, it serves millions of customers and operates a network that spans the nation.

The past few years haven't been kind to Verizon's stock price. Heavy spending on network upgrades and fierce competition have weighed on investor sentiment.

But that's where things get interesting. At just 8.44 times forward earnings, Verizon trades like a company in trouble. The market seems fixated on competitive pressures and past capital spending, missing the turning point in Verizon's story. The expensive phase of the 5G network buildout is winding down, and it's starting to show in the numbers.

The cash-flow narrative has shifted dramatically in recent years (see graph below). With major network investments in the rearview mirror, Verizon's free cash flow has surged over the prior 36 months. Furthermore, the wireless industry has matured over the past 12 months, and carriers are finally starting to show pricing discipline after years of aggressive promotions.

For income seekers, Verizon's 6.78% dividend yield turns heads. True, the 115% payout ratio raises eyebrows, but improving cash flow paints a more reassuring picture.

Moreover, the telecom giant's 18-year streak of dividend hikes speaks volumes about its commitment to shareholders. With network spending falling and cash flow rising, Verizon looks well-positioned to maintain its reputation as a reliable dividend payer.

Why buy these two high-yield dividend stocks?

Both Altria and Verizon have fallen out of Wall Street's favor, creating a classic "be greedy when others are fearful" scenario. Their stocks trade at single-digit earnings multiples while offering yields that dwarf the S&P 500's average payout.

But what's truly compelling here isn't just the eye-catching yields. These are market leaders with staying power, not speculative high-yield traps. Each company faces its share of headwinds, yet both have clear paths forward.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $348,216!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $47,425!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $480,681!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of December 30, 2024

George Budwell has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.

2 Ultra-High-Yield Dividend Stocks Worth Buying in 2025 was originally published by The Motley Fool