Dividend stocks have a strong track record of delivering higher total returns with lower volatility compared to the broader market. However, it’s important to note that they can still decline during market sell-offs, albeit not as much as the major indexes. During these downturns, it can be advantageous to consider buying high-quality dividend stocks with even higher dividend yields, as they tend to move in the opposite direction of stock prices.
Three top dividend stocks to consider during market sell-offs are NextEra Energy (NYSE: NEE), Brookfield Infrastructure (NYSE: BIPC, NYSE: BIP), and Enbridge (NYSE: ENB). These companies have the potential to provide supercharged income and total returns following a market sell-off.
NextEra Energy, a clean energy-focused utility, has a history of strong dividend growth, with a 10% compound annual growth rate over the last 20 years. The company currently offers an attractive dividend yield of around 2.8%, which could increase further during a market sell-off. NextEra Energy aims to boost its dividend by around 10% annually through at least 2026.
Brookfield Infrastructure, a global infrastructure giant, has consistently added shareholder value through its funds from operations (FFO) per share growth and dividend increases. The company currently offers a 4.5% dividend yield and aims to raise its payout by 5% to 9% annually over the long term.
Enbridge, a Canadian utility and pipeline company, has a strong record of increasing its dividend for 29 consecutive years. It offers a high dividend yield of around 7.5% and expects its cash flow per share to rise at a 3% annual rate through 2026. Enbridge’s growth forecast is supported by secured capital projects, cost savings, and potential acquisitions.
Investing in NextEra Energy, Brookfield Infrastructure, and Enbridge during a market sell-off could potentially lead to even higher returns, as their stock prices may decrease while their dividend yields increase. These companies offer high-yielding income streams and healthy growth profiles, making them attractive options for income investors looking to capitalize on market downturns.