2 High-Yield Dividend Stocks Near Their 52-Week Lows That Income Investors Are Sleeping On

Investors have concerns, including stubbornly high inflation, elevated energy prices, the Federal Reserve raising short-term interest rates, and rising longer-term U.S. Treasury yields. Still, the S&P 500 index has gained 12.5% this year, through Sept. 24.

However, during these uncertain times, investors can turn to dividend-paying stocks. Despite the market's advance this year, Realty Income (NYSE: O) and Home Depot (NYSE: HD) trade near their 52-week lows.

But income-oriented investors should view these high-yielding stocks as a buying opportunity.

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1. Realty Income

Realty Income is a real estate investment trust (REIT), a structure designed to attract dividend-seeking investors. That's because these types of companies have to pay out at least 90% of their taxable income as dividends.

The stock price closed at $55.41 on Sept. 24, after reaching its 52-week low of $55.07 earlier in the day. But that's likely partly due to higher long-term yields, which draw investors into fixed-income instruments. The yield on the 10-year U.S. Treasury note crossed 5% this month, reaching 5.18% vs. 4.79% on Sept. 1.

But Realty Income's business fundamentals remain sound. Generating most of its rental income from retail properties, its occupancy level remains high, including 98.8% as of June 30. Investors will like Realty Income's dividend yield and the stock's upside, providing an attractive total return potential.

The board of directors has raised dividends for 116 straight quarters. This includes boosting October's payout from $0.27 to $0.2715. Investors should note that Realty Income pays monthly dividends. At the new dividend rate, the stock has a 5.9% dividend yield. That's much higher than the S&P 500's 1.1% yield.

2. Home Depot

Home Depot, as the world's largest home-improvement retailer, gets affected by broad economic factors and interest rates. That's because homeowners have to feel confident when taking on major renovations, often borrowing to do so.

With consumers squeezed by high costs, they've been reluctant to take on big projects. That's reflected in Home Depot's tepid same-store sales growth, which increased 1.7% in the fiscal second quarter. This covered the period that ended on Aug. 2.

With higher borrowing costs, it's more expensive to buy a home, which will dampen renovation demand. Existing homeowners will also find borrowing costs higher when taking on large projects. Those factors helped push the share price near its 52-week low of $289.10, with the stock closing at $292.18 on Sept. 24.

Still, at some point, economic conditions will improve, interest rates will drop, and people will undergo construction work. When they do, it seems likely they'll turn to ubiquitous Home Depot stores.

In the meantime, shareholders will receive an above-market yield of 3.2%. Home Depot has also built an impressive track record of raising dividends. In fact, the company has raised payments annually since 2010. Even during the years of the Great Recession, Home Depot kept dividends flat from 2006 through 2009.

Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot and Realty Income. The Motley Fool has a disclosure policy.