The stock market has taken a tumble this year. Market indexes have declined by more than 10% from their recent peaks, driven down by concerns that tariffs will cause a recession. While most indexes have bounced off their bottom, many stocks are still down sharply.
That's creating buying opportunities for investors. Several high-quality dividend stocks are still down 20% or more from their recent peaks, which has driven their dividend yields higher. Here are three top ones that income-focused investors should buy like there's no tomorrow, since there is no telling how long this opportunity might last.
Brookfield Infrastructure
NYSE: BIPC
Key Data Points
Units of Brookfield Infrastructure Partners (BIP 2.62%) were recently down a little more than 20% from their 52-week high, while shares of its corporate twin, Brookfield Infrastructure Corporation (BIPC 1.43%), had fallen almost 20%. As a result of those declines, the partnership units yielded nearly 6%, while the corporation's dividend yield was around 4.8%. Either one looks like a great opportunity right now, though investors should note that the higher-yielding partnership sends a Schedule K-1 Federal Tax Form each year, which can complicate your tax filing.
The economically equivalent entities expect to grow their funds from operations (FFO) at a more than 10% annual rate in the coming years. Brookfield Infrastructure sees a combination of inflation-driven rate increases, volume growth, expansion projects, and acquisitions powering robust growth. The company already has a large backlog of commercially secured growth projects underway, led by its investments in semiconductor manufacturing and data center development projects.
These growth drivers should enable the global infrastructure platform to grow its dividend rate by 5% to 9% per year. Brookfield has increased its payout every year since its formation in 2008, growing its payout at a 9% annual rate over the past 16 years.
Prologis
NYSE: PLD
Key Data Points
Shares of Prologis (PLD 1.86%) were recently down over 22%. That slump has driven up the industrial REIT's dividend yield to 3.9%.
Prologis has been growing its high-yielding payout at an above-average rate. Over the last five years, it has delivered 13% compound annual dividend growth, which is much faster than the S&P 500's 5% and the 6% REIT sector average.
The leading global warehouse operator is in an excellent position to continue growing its dividend. Because there's currently a wide gap between the rental rates on its existing leases and market rents, the company expects to sign leases at higher rates as legacy contracts expire, which should drive steady rent growth for the next few years. It also has a vast land bank to support the growing demand for warehouse space. It's also using some of its land to develop data centers. Prologis has one of the strongest balance sheets in the sector, which will allow it to fund development projects and make acquisitions as compelling opportunities arise.
PepsiCo
NASDAQ: PEP
Key Data Points
PepsiCo (PEP 0.85%) stock was recently down nearly 27% from its 52-week high. That sell-off has propelled the beverage and food company's dividend yield up above 4.1%.
That payout level is about to head even higher. PepsiCo declared it would bump up its dividend payment by another 5% starting in June. That will extend its dividend growth streak to 53 consecutive years, keeping it in the select group of Dividend Kings, companies with 50 or more years of dividend increases.
Like many companies, PepsiCo is facing some near-term headwinds as shifts in global trade and slower consumer spending due to tariffs will impact its earnings this year. It now expects its earnings to be about flat with last year's level, compared to the mid-single-digit growth rate it initially expected.
However, over the long term, PepsiCo expects its investments in product innovation and productivity enhancements to yield revenue growth and margin improvements. That drives its view that it can deliver 4% to 6% annual organic revenue growth while increasing its earnings at a high single-digit rate. Meanwhile, it has a strong balance sheet, which allows it to make acquisitions as opportunities arise to enhance growth. For example, it recently agreed to buy Poppi for $1.7 billion to bolster its better-for-you beverage offerings. Those growth drivers should support continued dividend increases.
These high-quality, high-yielding dividend stocks are on sale
The tariff-driven market sell-off is creating opportunities to buy some top-notch dividend stocks at much lower prices. That's enabling income investors to lock in even higher dividend yields. With more dividend growth likely in the future, investors won't want to miss out on the chance to buy these dividend stocks at their current lower levels.
