In times of severe market volatility, investing in dividend stocks can be a lucrative hedge tactic, as it brings a steady stream of income whichever way the market goes. There is also significant money to be made for those unconcerned about a stock's short-term outlook if they buy stable dividend-paying companies on the dip. 

As of now, the S&P 500 is in the middle of a steep sell-off, and its average yield is just 1.7%. Here are three dividend stocks with much higher yields that are on sale now as potential boosts to your portfolio and/or retirement income

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1. Bayer

During the second quarter of 2020, pharmaceutical conglomerate Bayer (OTC:BAYR.Y) was able to keep its core business healthy amid COVID-19 disruptions. The company's crop sciences division experienced strong growth, which was offset by losses in its pharmaceutical segment as patients deferred elective procedures. Meanwhile, its consumer health product sales were flat year over year.

In total, the company recorded 10 billion euros in sales, 2.9 billion euros in earnings before interest, taxes, depreciation, and amortization (EBITDA), and 1.6 euros in earnings per share. Bayer also managed to turn its profits into 1.4 billion euros' worth of free cash flow

The company expects to have net debt of 33 billion euros for its fiscal year, compared with 5 billion euros in free cash flow. Bayer's enticing 5% dividend yield amounts to approximately $2.8 billion per year paid out to shareholders, which is more than covered by its free cash flow. Since 2006, the company's dividend has increased by 180%. The next payout date for Bayer's dividend will likely be in April or May of next year.

2. Nutrien 

Nutrien (NYSE:NTR) is the world's biggest potash producer and a provider of agricultural solutions, including nitrogen and phosphate-based fertilizers. While it's an old-school business, it's moving with the times: Over 45% of the company's sales in North America are now conducted digitally because of the coronavirus pandemic. In its quarter ended June 30, the company produced $3.8 billion in EBITDA. It offers a 4.8% dividend yield.

Even after all capital expenditures, interest, taxes, and dividend payments are accounted for, the company still has $900 million left to sustain its operations. At a free cash flow rate of $1.6 billion per quarter, the company is trading for about 19 times forward earnings. Although that is higher than the industry average of 13.6 times earnings, Nutrien's yield is also more than double the industry average of 2.19%.

3. Israel Chemicals Limited 

Last but not least, we have Israel Chemicals Limited (NYSE:ICL), an agricultural company focused on providing phosphate solutions and managing potash production in the Dead Sea. The stock currently has a yield of 4.7%. In Q2 2020, the company recorded $1.2 billion in sales and $20 million in free cash flow. 

Although Israel Chemicals paid out more than $36 million in dividends, the company still has $1.2 billion in total cash and unused credit facilities to ensure its payout is sustainable. Its financial leverage, measured in terms of net debt to EBITDA, stands at 2.4, which is well below the range (4 to 5) in which a company's debt repayment may be called into question.

With the stock trading at 17 times earnings, 4 times EBITDA, and 0.9 times price-to-sales, Israel Chemicals is also cheap enough to allow ample room for capital appreciation. Hence, investors who are browsing agriculture stocks may wish to add the company to their watchlist. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.