Dividend investing has long been a popular strategy for those seeking steady income and potential long-term growth. However, stocks with exceptionally high yields (over 5%) often raise eyebrows among investors. These ultra-high-yield stocks tend to underperform the broader market in the short term, as their generous payouts often reflect underlying challenges.

Still, academic research suggests that high-yield dividend stocks frequently outperform the key benchmarks, like the S 500, over extended periods, particularly when held for 20 years or more. This long-term approach allows companies to address their challenges while investors benefit from reinvesting their substantial dividends, potentially leading to significant compound returns.

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Source Fool.com