2 High-Yield Stocks to Buy Hand Over Fist and 1 to Avoid

If you see a stock with a dividend yield exceeding 14%, you should immediately know you have to dig deeper. That is usually a sign that Wall Street views the investment as risky, which is why most investors will probably be better off avoiding AGNC Investment (NASDAQ: AGNC). But you'll likely find Realty Income (NYSE: O) and W.P. Carey (NYSE: WPC), both of which have yields just above 5%, much more attractive. Here's why lower is better here.

Over time, AGNC Investment has done a fairly good job of living up to its goals. The issue is that the goal is total return, not income. As a real estate investment trust (REIT), income is an important component of total return, but the real benefit of the income stream shows up via dividend reinvestment. The chart below is complex, but it highlights the important themes.