Dividend stocks have fallen out of fashion during the pandemic.

With interest rates at rock-bottom levels, investors have fled from assets like bonds into stocks, lifting their valuations. At the same time, the impact of the crisis on consumer spending and the overall economy has juiced tech stocks, which are well-suited to surging trends like remote work and e-commerce, but generally don't pay dividends.

One person handing another a $100 bill.

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Meanwhile, a significant number of struggling companies have been forced to cut or suspend their quarterly payouts, and sectors like energy and financials that are well-known for paying generous dividends have been among those hit harder by the crisis.

However, there are still some solid dividend stocks out there for investors looking for steady income streams -- among them, Brookfield Renewable Partners (BEP 0.76%)Altria (MO 0.22%), and Innovative Industrial Properties (IIPR 0.92%).

Two people walking by a solar installation with a wind turbine in the background

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Bet on clean energy

The challenges in the oil and gas sector are creating opportunities for renewable energy companies. 

Oil prices were already trending lower amid a market oversupply, as well as a growing push toward renewable energy from consumers, governments, and corporations, but the pandemic appears to be accelerating the transition to clean energy. That benefits Brookfield Renewable Partners, a limited partnership that is majority-owned by Brookfield Asset Partners. It has more than 19 gigawatts of installed capacity, enough to power roughly 14 million U.S. homes, diversified across sources such as hydroelectric, wind, and solar. The company's dividend currently yields 4%, and it's targeting long-term returns to shareholders in the range of 12% to 15% with a target payout ratio of 70%.

The company has another 18 gigawatts worth of projects in its development pipeline, and it expects those to be major growth drivers, along with expanding profit margins and strategic acquisitions. In March, the company completed its purchase of Terraform Power, adding 4.2 gigawatts in installed capacity and adding to its scale advantages, and it also agreed to acquire a Brazilian solar plant with 1.2 gigawatts of capacity.

In its most recent quarter, normalized funds from operations grew 19%, and the shocks going on in the broader energy industry should support further growth, especially with companies like Apple, AmazonAlphabet, and Nike pledging to make their operations carbon-neutral over the next decade or two. Citigroup's CEO even said recently that banks have a duty to push their clients to cut emissions. Brookfield should benefit from those long-term tailwinds, which are likely to accelerate if former Vice President Joe Biden gets elected to the White House in November.  

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A recession-proof high-yielder

For generations, Altria has been one of the best dividend stocks to own, and that remains true even as cigarette consumption declines. The company has raised its dividend 55 times in the last 51 years, and recently hiked its quarterly payout by 2.4% to $0.86 a share, giving investors an 8% yield.

Despite the pandemic, the company managed to grow earnings per share 8.5% through the first half of the year, and revenue rose 3.9% to $12.7 billion. For the full year, the domestic Marlboro maker expects its adjusted earnings per share will rise by as much as 4%, or at worst, remain flat, as the pandemic has impacted its wine business and has added expenses for things like PPE, safety procedures, and employee bonuses. However, the rate at which cigarette consumption fell was actually lower than had been expected; the pandemic may be propelling a slight elevation in smoking rates, which would fit with historical patterns. Management now anticipates consumption will decline by 2% to 3.5% this year, compared to a previous forecast for a 4% to 6% drop.

Altria's finances and its share price have been hammered in recent years by its poorly timed investment in JUUL Labs, which has led to nearly $10 billion in write-downs as governments have cracked down on flavored vapes and companies' attempts to market them to minors. However, those challenges seem to be fully priced into the stock. Altria trades at a P/E ratio of about 10, and is making moves to tap into next-gen product growth; it launched IQOS Heatsticks, a Philip Morris product, in July, and expects the product to be available in 700 stores by August. It's also working on getting regulatory approval for On!, a new oral nicotine product.

Altria will never be a high-growth stock, but its huge profit margins and low valuation mean its 8% yield is stable, and the company is committed to paying out about 80% of its profits in dividends.

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A picks-and-shovels cannabis play

A dividend-paying marijuana stock may sound like a contradiction in terms, especially as share prices in the marijuana sector have fallen sharply since the Canadian legalization bubble burst. However, Innovative Industrial Properties (IIP) is a unique investment option in the sector -- a REIT that leases facilities to marijuana growers.

That business model has insulated it from the fluctuations in marijuana prices and the regulatory environment. The stock pays a dividend that today yields 3.5% -- not quite 4%, but its status as the major REIT serving its sector and its rapid growth make it worth a look even for investors who would prefer higher yields. Revenue jumped 183% to $24.3 million in its most recent quarter, while net income surged 322% to $13 million, showing off the company's sizable margins and the strength of its business model.

IIP continues to expand rapidly, adding eight properties in the most recent quarter with a total of 775,000 rentable square feet. As a grow-house landlord, the stock essentially functions as a picks-and-shovels play in the cannabis sector; it will win as long as consumption grows, making it a much safer choice than any one of the dozens of marijuana growers competing with each other. Its tenants include Cresco Labs, PharmaCann, and Green Thumb.

One catalyst that could also favor the company's growth would be the election of Joe Biden, which could bring the country closer to some form of marijuana legalization at the federal level. At the moment, movement on that front has slowed down in Washington despite excitement over recreational legalization in a handful of states and Canada.

IIP has one of the best business models in cannabis, and legalization seems almost certain to happen at some point, as younger Americans overwhelmingly favor it. Over the long term, IIP figures to be a winner.