2 High-Yield Stocks to Buy in October (Hint: Bristol Myers Squibb Is One)

As October gets underway, the S&P 500 index (SNPINDEX: ^GSPC) is trading near all-time highs and offering a tiny little 1% dividend yield. That means that Bristol Myers Squibb (NYSE: BMY) is offering a yield more than 4x larger, while Realty Income's (NYSE: O) is roughly 6x larger. If you are looking for high-yield stocks to buy in October, both should sound very enticing. Here's a quick look at each one.

Bristol Myers Squibb is working on it

Bristol Myers Squibb traces its birth back to the late 1800s. It has a long and successful history in the pharmaceutical sector. However, the sector is highly competitive, and there's an important nuance regarding new drugs: they receive patent exclusivity for only a short period. New drugs can generate huge profits, but only for a brief period. So, drug makers are always on the lookout for new blockbuster drugs to offset patent losses.

Image source: Getty Images.

The problem is that patent expirations follow a set schedule, but research and development does not. Right now, Bristol Myers Squibb is facing patent expirations, but there are no clear winners to replace the lost revenue just yet. But it has a solid pipeline and a strong development history, so investors should probably give this well-run drugmaker the benefit of the doubt. And you can collect a generous 4.2% yield while you wait. If history is any guide, the company will eventually develop some new blockbusters.

Realty Income is getting hit by higher rates

Realty Income is a large and conservatively run real estate investment trust (REIT). Rising bond yields and interest rates are likely to raise its cost of capital, making new acquisitions less profitable, at least in the near term. That has investors selling this well-respected REIT despite its impressive 31-year streak of annual dividend increases. The yield is a lofty 6%.

The truth is, there could be more pain ahead if rates and yields continue to rise. However, the property market has historically adjusted to enable property buyers to make profitable investments. If it didn't, nobody would ever buy a property again. Beyond the yield and reliable dividend history, Realty Income offers a portfolio spread across North America and Europe. It has exposure to retail and industrial properties, as well as a number of more unique assets, such as data centers and casinos. And the dividend is paid monthly, making it easy to budget around. If you can stomach some near-term headwinds, Realty Income is an industry bellwether that has proven it can survive hard times while continuing to reward investors with a growing dividend.

This October gives you the chance to buy while others are fearful

Without playing too heavily into the Halloween theme, investors are frightened by what are likely to be short-term problems at Bristol Myers Squibb and Realty Income. That has pushed their yields to attractive levels, creating a buying opportunity for income-focused investors who think long term. If that's you, October could be the time to take a bite of these industry-leading high-yield stocks.

Reuben Gregg Brewer has positions in Realty Income. The Motley Fool has positions in and recommends Bristol Myers Squibb and Realty Income. The Motley Fool has a disclosure policy.