Two High-Yield Income Plays Worth Considering in Today's Rate Environment

Interest rate cuts are bringing dividend stocks back into focus. After the Federal Reserve lowered benchmark rates six times in 2024 and 2025, high-yield equities suddenly look a lot more attractive compared to bonds and CDs. Let’s break down two solid income picks that deserve attention.

Realty Income (NYSE: O) — The Commercial Real Estate Play

Realty Income stands out as one of the world’s largest equity REITs, operating a massive portfolio of over 15,500 commercial properties across the U.S. and Europe. Here’s how the business works: it buys properties, leases them to tenants, and shares the rental income. As a triple-net lease REIT, tenants handle their own maintenance, insurance, and property taxes — a huge advantage for the company’s cash flow.

The Portfolio Strength

The key to Realty’s resilience lies in its tenant base. It focuses on recession-resistant retail, particularly drugstores, convenience stores, and discount retailers. Its top three tenants are 7-Eleven (3.3% of annualized base rent), Dollar General (3.2%), and Walgreens (3.1%). Despite some store closures in recent years, stronger tenants expanded operations enough to offset the pressure.

The numbers prove it: Realty maintains a 98.7% occupancy rate as of Q3 2025, consistent with its 96%+ occupancy since going public in 1994. The company has raised its dividend 132 times since its IPO — a testament to income stability.

The Income Story

Realty must distribute at least 90% of taxable income as dividends, creating a reliable payout stream. Adjusted funds from operations (AFFO) per share are expected to grow from $4.19 in 2024 to $4.25-$4.27 in 2025, comfortably covering the forward dividend rate of $3.22 per share. That translates to a forward yield of 5.6%.

At $57 per share, the stock trades at just 13 times its projected 2025 AFFO — reasonable valuation territory for a defensive income generator.

Energy Transfer (NYSE: ET) — The Pipeline Revenue Machine

Energy Transfer operates a different income model entirely. As a master limited partnership (MLP), it runs over 140,000 miles of pipeline across 44 states, providing delivery, storage, and processing services for natural gas, LNG, natural gas liquids, crude oil, and refined products.

Why the “Toll Road” Model Works

Here’s the beauty: Energy Transfer doesn’t bet on commodity prices. Instead, it charges extraction companies and refiners fees to move products through its infrastructure. Whether oil trades at $50 or $150, the cash flows remain stable. It’s a true utility-like business model insulated from price volatility.

Growing Cash and Distributions

The numbers show consistent growth. Adjusted distributable cash flow (DCF) — the real money funding distributions — climbed from $5.74 billion in 2020 to $8.36 billion in 2024. Annual distributions jumped from $2.47 billion to $4.39 billion over the same period. This growth came from strategic acquisitions, Permian Basin expansion, and rising LNG export demand.

Forward Expectations

Analysts project Energy Transfer’s earnings per unit (EPU) will rise 4% to $1.34 in 2025, covering its forward distribution of $1.33 per unit — yielding 8%. Part of that yield is tax-efficient return of capital, while adjusted DCF funds the remainder.

At $17 per share, it trades at 13 times projected 2025 EPU. That valuation makes it compelling for value-focused income investors.

The Comparison

Both stocks offer substantial yields in a declining rate environment. Realty Income appeals to those seeking defensive stability with a 5.6% yield and fortress-like occupancy rates. Energy Transfer attracts those comfortable with MLPs, offering the higher 8% yield through its toll-road pipeline model.

The shared advantage: both trade at reasonable valuations (13x forward metrics) and should benefit as more income-seeking investors rotate into dividend stocks now that rates are falling. Neither is flashy, but both deliver what matters most to income investors — reliable, growing payouts backed by recurring revenue models.