High-yield dividend stocks can be a great way to grow your capital. Thanks to the power of compounding, stocks that offer above-average dividends often produce returns on capital that beat the market over long periods. However, these stocks can also be dangerous value traps. Abnormally high yields are often the result of a rapid downturn in a company's share price resulting from a deteriorating fundamental picture.

Telecom giants AT (NYSE: T) and Verizon Communications (NYSE: VZ) are prime examples of this phenomenon. Both companies have seen a sharp decline in their share prices in 2023 over concerns over their debt-laden balance sheets, the emergence of leaner competitors, and a less-than-stellar macroeconomic outlook. As a result of this steady decline, AT's stock now pays out an annualized yield of 7.12%. Similarly, Verizon's yield has ballooned to 7.28% this year.

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Source Fool.com