Although passive income has always been a strong component of a well-balanced portfolio, investors may want to pay particular attention to high-yield dividend stocks to buy. Should the Federal Reserve continue to move forward with its interest rate hikes, bond yields will rise. In turn, securities that can’t keep pace with a higher dividend yield may suffer the consequences.

Indeed, one of the problematic circumstances associated with the Fed’s otherwise noble efforts in containing inflation centers on the competition. Unless you anticipate the U.S. government defaulting on its obligations, its debt securities practically represent zero-risk investments. Of course, when zero-risk investments offer a superior yield to equities, that becomes a serious dilemma. To help mitigate this dynamic, those that want to stay in the market should consider the below high-yield dividend stocks to buy.

Pfizer (PFE)

One of the world’s biggest pharmaceutical companies, Pfizer (NYSE:PFE) obviously played a major role in addressing the Covid-19 crisis. However, with pandemic-related fears subsiding quickly, the shifting framework boded poorly for PFE stock. Since the start of the new year, PFE gave up nearly 22% of its equity value. Over the trailing year, it’s down 26%.

Nevertheless, it might not be the wisest idea to abandon a generally solid enterprise. For instance, Pfizer carries an Altman Z-Score of 3.4, indicating fiscal resilience. As well, its debt-to-EBITDA ratio comes in at 0.85 times, favorably below the sector median of 1.74 times. Operationally, Pfizer benefits from an excellent three-year revenue growth rate of 34.4%. Also, it’s very much profitable with a net margin of 31.27%.

For passive income, Pfizer carries a forward yield of 4.09%. Its payout ratio is on the low side at 42.3%. Also, it features 12 years of consecutive annual dividend increases. Therefore, it makes for an intriguing case for high-yield dividend stocks to buy.

Phillips 66 (PSX)

A hydrocarbon energy firm, Phillips 66 (NYSE:PSX) specializes in the downstream component of the energy value chain. This arena involves refining and marketing. To be fair, the new year hasn’t treated PSX stock all that well. In addition, some of the banking jitters impacted sentiment in other areas. Since the January opener, PSX dipped over 6%.

Nevertheless, it could rank among the high-yield dividend stocks to buy. Fundamentally, the normalization of society (i.e. workers returning to the office) should benefit downstream energy specialists. Financially, Phillips 66 offers several enticing attributes. For instance, its Altman Z-Score of 4.07 indicates a stable business. Operationally, its revenue growth rate of 14.9% and EBITDA growth rate of 39.3% during the past three years bolsters confidence. For passive income, the energy firm carries a forward yield of 4.43%. Moreover, its payout ratio sits at 32.04%, providing confidence regarding yield sustainability.

Philip Morris (PM)

As one of the world’s biggest tobacco firms, Philip Morris (NYSE:PM) invariably carries a controversial profile. For those willing to overlook that angle, another challenge exists: global smoking rates have declined over the past several years. From this perspective, it may not be surprising that PM went volatile in 2023. Since the Jan. opener, PM fell more than 6%.

Still, it could stand among the high-yield dividend stocks to buy because the business isn’t completely irrelevant. Should economic hardships materialize, it might be possible that global smoking rates rise due to the stress relief phenomenon. Also, Philip Morris offers heated tobacco products – essentially e-cigarettes or vaporizers – that offer a popular alternative to “analog” products. In addition, Philip Morris offers a stable balance sheet (with an Altman Z-Score of 3.1). As well, it’s a richly profitable enterprise with a net margin of 28.49%.

Regarding passive rewards for shareholders, the company offers a forward yield of 5.36%. While its payout ratio stands a bit on the high side at 73.92%, it features 14 years of consecutive annual dividend increases.

BHP Group (BHP)

A metals and mining firm, BHP Group (NYSE:BHP) represents an intriguing take for high-yield dividend stocks. That’s because the company produces some of the hottest demand commodities in the modern world. This includes copper, iron ore, nickel, and potash. Indeed, as global economies compete in relevant sectors such as electric vehicles, securing critical resources may carry a hefty premium.

Admittedly, though, the market appears a little slow in recognizing the forward outlook for BHP and its ilk. Since the January opener, shares stumbled over 6%. However, investors should look to BHP’s financials for confidence. In particular, the company owns a solid balance sheet (with an Altman Z-Score of 5.44).

Also, its three-year revenue growth rate stands at 14.2% and its net margin comes in at nearly 46%. Both stats rank in the upper half for the mining industry. To boot, the market prices BHP at a forward multiple of only 9.09, making it undervalued. Turning to passive income, BHP offers a forward yield of 6.25%. Its payout ratio is a tad on the high side at 63.51% but it’s relatively workable.

Rio Tinto (RIO)

Billed as a leading global mining group, Rio Tinto (NYSE:RIO) also offers a relevant take on high-yield dividend stocks. In particular, it could play a significant role in EVs. With its specialty in copper and lithium mining, Rio basically serves the infrastructural needs of individual EV brands. Further, while it’s impossible to know which brand will win out decades from today, it’s a safe bet every automaker will require gobs of lithium.

Therefore, I’m not terribly concerned about the 9% loss in RIO on a year-to-date basis. Don’t get me wrong – I’m not dismissing it. However, the longer-term implications offer an extremely attractive profile for this mining enterprise.

Additionally, the company brings solid financials to the table. Its three-year revenue growth rate comes in at 11.7%, while its net margin blows most competitors out of the water at 22.31%. It’s also undervalued against both trailing and forward earnings. For passive income, Rio carries a forward yield of 6.96%. As with BHP Group above, its payout ratio is a bit high at 66.63%. Still, it’s relatively workable.

ICL Group (ICL)

Heading into the riskier side of high-yield dividend stocks to buy, ICL Group (NYSE:ICL) represents a multinational manufacturing concern that develops, produces, and markets fertilizers, metals, and other special-purpose chemical products. Because of the tough economic environment along with the recent banking sector jitters, ICL hasn’t performed well recently. Since the start of the new year, ICL fell over 9%.

That’s not all. In the past 365 days, ICL gave up nearly 44% of its equity value. Still, those willing to accept some risk in their high-yield dividend stocks may have a compelling opportunity here. Specifically, ICL enjoys very strong financials. In addition to its stable balance sheet, the company’s three-year revenue growth rate comes in at 23.6%. Also, it’s highly profitable with a net margin of 21.56%.

Also, it’s undervalued, trading at a trailing multiple of 3.98. In contrast, the sector median value is 12.16 times. Regarding rewards for shareholders, ICL’s forward yield comes out to 8.38%. The tradeoff is that its payout ratio is high at 78.31%. Still, for sensible speculation, ICL may attract the right investor.

Innovative Industrial Properties (IIPR)

Tied tangentially to the cannabis industry, Innovative Industrial Properties (NYSE:IIPR) represents a leading provider of real estate capital for the underlying “green” industry. To be clear, Innovative itself isn’t a cannabis grower. Rather, it helps enterprises that focus on this particular subsegment of the agricultural industry find success.

Unfortunately, the market itself generates controversy for obvious reasons. As well, legal vagaries between federal and state laws stymie forward progress. Therefore, IIPR rates as an extremely volatile example of high-yield dividend stocks. Since the start of the year, it’s down over 18%. In the trailing year, it lost over 59% of its equity value – a hefty figure.

While troubled, prospective speculators should note that Innovative features a cash-rich balance sheet. Also, its operations are on fire (in a good way). Its three-year revenue growth rate comes in at 33.7% while its net margin stands at nearly 56%. Finally, Innovative features a forward yield of 8.97%. The one drawback here is that its payout ratio pings at 126.39%. Therefore, sustainability will be a concern, making IIPR appropriate for speculators.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.