The first thing that most investors will probably notice about Redwood Trust (NYSE: RWT) is its huge 8.8% dividend yield. For investors searching out dividend stocks, that high of a yield is as irresistible as a flame to a moth. In the end, however, if you take the time to look at this real estate investment trust's (REIT's) history, you'll probably err on the side of caution and look elsewhere. Here's why.

REIT stalwart Realty Income (NYSE: O) has a 5.5% dividend yield, which is fairly attractive. The average REIT's yield is around 4.9%, using the Vanguard Real Estate ETF as a proxy, and the S 500 index's yield is roughly 1.5%. Realty Income's yield also happens to be near its highest levels over the past decade, hinting that the stock is on sale right now.

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Source Fool.com