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3 Dividend Stocks to Buy If the Stock Market Crashes

By Keith Speights – Oct 17, 2021 at 5:57AM

Key Points

  • Brookfield Renewable is poised for long-term growth with increased demand for renewable energy.
  • Innovative Industrial Properties has lots of opportunities to expand in the regulated cannabis market.
  • Johnson & Johnson is a Dividend King with a rock-solid presence in the global healthcare sector.

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They're resilient and already offer attractive dividends.

Most stocks sink when the stock market itself plunges. But there's a silver lining for investors when it happens. You get an opportunity to buy quality stocks a much lower prices.

There's an even better scenario with well-run companies that pay dividends. Not only are their stocks available at a discount, but the lower share prices also allow you to lock in higher dividend yields

No one knows for sure whether the stock market will crash anytime soon. However, here are three dividend stocks to buy if it does.

A person looking at a laptop.

Image source: Getty Images.

1. Brookfield Renewable

It's likely that Brookfield Renewable (BEP -0.38%) (BEPC 0.16%) stock would be pulled down if the overall stock market tanks. That's what happened last year during the pandemic-fueled sell-off. However, a stock market crash won't change the company's excellent growth prospects one bit.

Brookfield Renewable ranks as a leading provider of renewable energy. It operates hydroelectric, solar, and wind facilities across the world that combined generate more than 21 gigawatts of power.

Demand for renewable energy will almost certainly continue to grow. Many countries and major corporations have committed to aggressive carbon emissions reduction over the next few decades. Brookfield Renewable should profit tremendously from this increased demand. The company is counting on it, with its development pipeline including another 31 gigawatts of capacity.

Brookfield Renewable's dividend yield currently stands at close to 3.2%. That yield could increase quite a bit during another market meltdown, making this a must-own dividend stock. 

2. Innovative Industrial Properties

Innovative Industrial Properties' (IIPR 3.42%) dividend yield of 2.56% is much lower than it was a year ago. That isn't because the company has reduced its dividend payout. Actually, IIP has increased its dividend by 21% over the last 12 months. But its yield is down because the stock is up so much -- soaring nearly 80% during the period. 

I completely agree with my Motley Fool colleague Will Healy that IIP is an ideal growth stock to buy and hold during a market downturn. A pullback in IIP's share price would boost its dividend yield. More importantly, though, the company's growth shouldn't be interrupted regardless of what the stock market does.

IIP provides real estate capital to companies in the regulated cannabis market. Cannabis operators sell their properties to IIP, which then leases the properties back to the operators. This gives the cannabis companies much-needed capital. It provides a steady revenue stream for IIP.

It shouldn't be difficult for IIP to keep growing robustly. The company currently owns 75 properties in 19 states. IIP's growth opportunities include finalized additional sale-leaseback transactions in these states as well as expanding into other states that have legalized cannabis.

3. Johnson & Johnson

Few companies have stood the test of time like Johnson & Johnson (JNJ 0.38%) has. Founded in 1886, J&J has survived and thrived through wars, recessions, and multiple stock market crashes. 

Perhaps the biggest plus for Johnson & Johnson is its diversification in a sector with solid growth potential. It's the largest healthcare company in the world with multibillion-dollar businesses spanning consumer health, medical devices, and pharmaceuticals.

Around 70% of J&J's total revenue comes from products that hold a No. 1 or No. 2 global market share. The company doesn't just rest on its laurels, though. Close to one-fourth of its total sales are from products that were launched within the past five years.

Johnson & Johnson is a Dividend King with 59 consecutive years of dividend increases. This streak is likely to continue for a long time to come. A major market pullback would present a great opportunity to buy one of the most stable stocks around at a discount and with a higher yield.

Keith Speights owns shares of Brookfield Renewable Corporation, Brookfield Renewable Partners, and Innovative Industrial Properties. The Motley Fool owns shares of and recommends Innovative Industrial Properties. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

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