There are many reasons to like high-yield dividend stocks. If you’re a retiree looking to generate a steady income stream from your portfolio, high-yielders can provide you the cash flow you seek from a much smaller capital base compared to other investment vehicles.

Even if you’re more capital growth-focused than income-focused with your portfolio, stocks with high-yield dividends yields can also help you achieve your investing objectives.

As Louis Navellier has argued, the steady profits generated from their large quarterly or monthly payouts can be reinvested, helping to boost compounded returns.

Having said all of this, if you decide to pursue this investing strategy, keep in mind the importance of being selective. Many stocks sporting a high yield can be best described as yield traps. In other words, stocks with unsustainable dividends that they’ll either have to cut or suspend down the road.

But in the case of these seven high-yield dividend stocks, yield trap risk is minimal. Each one generates more than enough from earnings to maintain (and steadily grow) its rate of payout.

Dow Inc. (DOW)

Formed when DowDuPont split into three separate companies, chemical company Dow Inc. (NYSE:DOW) has delivered a mixed performance since its 2019 stock market debut. Still, you may want to consider buying it.

Why? First, DOW stock pays a high dividend. It has a forward yield of 5.05%. Its payout rate (dividends as a percentage of earnings) comes in at just 31.39%. Unlike other high-yielders in cyclical industries, its current rate of payout is very sustainable.

Second, there may be a path for it to move higher over from here. With its low valuation (around 7x earnings), management is wisely buying back the company’s undervalued shares.

Dow is currently repurchasing $3 billion worth of stock. These stock buybacks could help gradually move shares up to a price more in line with its underlying value.

Hanesbrands (HBI)

Falling more than 44% over the past twelve months, Hanesbrands (NYSE:HBI) has joined the club of high-yield dividend stocks.

Currently, it has a forward yield of around 5.56%. With its big drop and its big yield, at first glance, you may think the apparel maker belongs in the “yield traps” category.

However, take a look at its payout ratio. It is paying out less than 50% of its earnings (46.9%) as dividends. If a recession arrives in the coming year, this maker of everyday clothing like socks and underwear could prove resilient.

According to Seeking Alpha, even the low end of analyst forecasts for 2023 earnings ($1.28 per share) are above this year’s estimate. Once today’s macro storms pass, HBI stock could climb back to a much higher valuation. Climbing back to a 15x multiple would result in a more than 63% move higher.

Altria Group (MO)

Yes, if you look up Altria Group (NYSE:MO) on a stock screener today, it will show you a dividend payout ratio well over 100%.

Yet before you see this as a sign that the tobacco company, parent of Philip Morris USA, is on the verge of slashing its dividend, it’s not as if the company’s cash-generating abilities have taken a serious hit.

Instead, reported earnings have been depressed by writing off its investment in vape products company Juul. Operating cash flow has held constant, at between $8.3 billion and $8.4 billion in recent years.

This gives it more than enough cash to continue paying MO stock investors around $6.5 billion per year in dividends. Furthermore, with the inelastic nature of its product, it’s able to raise prices to offset both declining use and inflation. A lot points to its 7.92% yield is sustainable.

New York Community Bancorp (NYCB)

As I discussed back in June, income and value investors alike have started to seize the opportunity with New York Community Bancorp (NYSE:NYCB). Between its high yield, and its discount to book value, bargain hunters have been snapping up shares in the regional bank since the spring.

Yet while it’s moved up in recent months, NYCB stock remains a high-yielding deep value play at current prices. Its current forward yield comes in at 6.24%. Expected earnings of $1.31 per share cover its 68-cent annual dividend yield by a nearly two-to-one margin. It also continues to trade at a moderate discount to book value (20%).

That’s not all. There’s something in play that could help NYCB move even higher: its pending merger with Flagstar Bancorp (NYSE:FBC). Success with this deal could in time enable this stock to re-hit its past highs (over $14 per share).

Verizon Communications (VZ)

When it comes to high-yield dividend stocks in the telecom sector, AT&T (NYSE:T) may be the name that first comes to mind. Yet instead of making “Ma Bell” your choice among telecom companies for high yield, you may want to opt for its main rival, Verizon Communications (NYSE:VZ).

VZ stock may have a lower forward yield (5.65%) than T stock (6.02%), but this telecom stock beats it in other areas. For starters, the stock has a much lower payout ratio (51.41%) than AT&T (70.58%).

Also, it has raised its dividend payout 17 years in a row. AT&T, as you may recall, slashed its dividend after the Warner Bros. Discovery (NASDAQ:WBD) spinoff. It may be years before it is raised again. Verizon’s dividend growth, albeit at a snail’s pace (around 2.08% per year), could in time make it the higher-yielder.

On the date of publication, Thomas Niel held a long position in MO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.