2 Top Dividend Stocks Down More Than 12% That You'll Regret Not Buying

Market downturns like the one seen this year can present unique opportunities for dividend investors. When stock prices fall, the dividend yields consequently increase, giving savvy investors a chance to secure a more rewarding income stream from quality dividend stocks.

Two prime examples of dividend stocks that have dipped significantly this year are Realty Income (O) and Brookfield Infrastructure (BIPC 0.72%) (BIP -0.69%). Both have seen their values decline by over 12% from their 52-week highs. Here's why missing out on these stocks during this market retreat could lead to regret for dividend investors.

Realty Income: A Hidden Gem on Sale

The price of Realty Income shares has dropped more than 12% from its peak, increasing its dividend yield to an enticing 5.7%. This yield is particularly appealing for a high-quality dividend stock.

The attrition in Realty Income’s stock price has made its valuation more appealing. Last year, this real estate investment trust (REIT) reported an adjusted funds from operations (FFO) of $4.19 per share. Currently trading around $57, the stock is valued at approximately 13.5 times its FFO—significantly lower than many peers that typically fetch more than 15 times their FFO.

Realty Income boasts a stellar dividend history, having increased its payments a remarkable 130 times since it entered the public market three decades ago. It has maintained an unbroken record of 30 consecutive years and 110 quarters of dividend increases, demonstrating a compound annual growth rate of 4.3% over 30 years.

Looking forward, Realty Income appears poised to continue boosting its dividend. It maintains one of the strongest financial positions in the REIT sector, highlighted by its high credit rating—one of just eight REITs rated A3/A- or better. This strong rating grants it excellent access to low-cost capital for further investments in income-producing properties.

The company's global diversity further enhances its prospects. Realty Income estimates that its addressable market for net lease real estate in the U.S. is valued at $5.4 trillion, with an additional $8.5 trillion in Europe. With a property portfolio worth $58 billion across eight countries, Realty Income has ample opportunities for growth, promising potential increases in both its portfolio and future dividend payouts.

Brookfield Infrastructure: An Exceptional Buy

Brookfield Infrastructure has experienced an even sharper decline, with shares dropping over 21% from recent highs, which has driven its dividend yield to 4.9%.

This global infrastructure powerhouse has a history of increasing its dividend for all 16 years since its establishment, achieving a compound annual growth rate of 9% during that time.

Looking ahead, Brookfield is targeting annual dividend growth of 5% to 9%. The company also anticipates significant growth opportunities, estimating a need for an investment of $100 trillion globally in infrastructure maintenance, development, and construction over the next 15 years. This projection opens up numerous avenues for expansion, with an active $8 billion in projects currently under construction and another $4 billion in development.

Beyond capital projects, Brookfield Infrastructure benefits from inflation-related rate hikes, increased demand due to economic growth, and profitable acquisitions, expecting to see over 10% annual growth in its FFO per share in the coming years.

Investors gain exposure to all this growth and yield at a remarkably low valuation, following Brookfield’s recent stock price drop. Last year, it reported $3.12 of FFO per share. With its shares currently at around $35, this places Brookfield at just above 11 times its FFO—far below the S&P 500’s trading ratio of over 20 times earnings. Given its impressive growth potential, Brookfield is likely undervalued relative to its real worth.

Seize the Opportunity with Realty Income and Brookfield Infrastructure

The recent sell-offs in Realty Income and Brookfield Infrastructure have made their stock valuations more attractive while simultaneously increasing their dividend yields. Both stocks present compelling investment opportunities right now, as they show promise for sustaining their high-yield dividends into the future. The expected growth in their dividends bodes well for strong total returns in the long run. Therefore, it’s wise to consider taking advantage of the current market dips before missing out on these opportunities.

stocks, dividends, investment