During a market correction, the dividend yields on certain stocks are likely to become even more appealing. Dividend stocks have historically provided higher total returns with less volatility compared to the broader market. However, they can still experience declines during market sell-offs, although they may not drop as much as major indexes.
Market sell-offs present opportunities to acquire high-quality dividend stocks with increased dividend yields, as they move inversely to stock prices. It’s wise to have a watch list of top dividend stocks to consider purchasing during market downturns. Three stocks that should be on the radar are NextEra Energy, Brookfield Infrastructure, and Enbridge. These stocks have the potential to deliver strong income and total returns following a market correction.
NextEra Energy has shown exceptional dividend growth over the years, with a 10% compound annual rate increase in payouts. The company also boasts impressive earnings and cash flow growth, resulting in market-beating total returns. With a current dividend yield of around 2.8%, NextEra Energy is positioned to increase its dividend by approximately 10% annually through 2026.
Brookfield Infrastructure has demonstrated value creation for shareholders, with FFO per share growing at a 15% compound annual rate since 2009. The company offers a 4.5% dividend yield and aims to increase its payout by 5% to 9% annually in the long term. Organic growth drivers and strategic acquisitions are expected to support this goal.
Enbridge has a strong track record of dividend increases, having raised its payout for 29 consecutive years. The company currently offers a substantial yield of around 7.5% and expects modest but steady cash flow growth in the coming years. Enbridge’s investment capacity, cost savings, and secured capital projects are factors driving its growth forecast.
Overall, NextEra Energy, Brookfield Infrastructure, and Enbridge are well-positioned to deliver robust total returns in the future. Their high dividend yields and growth prospects make them attractive investment opportunities, particularly during market sell-offs when their stock prices may decrease and dividend yields may rise. These stocks should be considered by income investors looking to capitalize on high-quality dividend stocks during market downturns.