2 overtaxed dividend stocks to buy if there is a sell-off in the stock market

Stock market sell-offs can be difficult times for investors. It’s never fun to see the value of your portfolio plummet. However, with challenges can come opportunities.

A silver lining to stock market selling is that dividend yields it moves in the opposite direction to stock prices. For this reason, they often provide the opportunity to lock in even more profitable income streams from some charts shares with dividends. Dominion Energy (NYSE:D) and Brookfield Infrastructure (NYSE: BIPC)(NYSE: BIP) stand out as great dividend stocks to buy during the selloff because a great the decline would increase their already supercharged returns.

Struggle for stability

Dominion Energy currently offers a dividend yield approaching 5%. It is well above average, considering that S&P 500his the dividend yield is less than 1.5%.

The utility intends to maintain the current payment rate for the next several years. It is in the process of selling three natural gas utilities to be able to recycle that capital to grow its electric utility operations. Invest $43 billion by 2029 a variety of projects, including building clean energy generation such as solar and offshore wind projects, while investing in expanding electricity transmission and distribution infrastructure. These investments should grow Dominion’s earnings per share at an annual rate of 5% to 7%.

Dominion plans to keep its earnings growing to support its continued growth, which it will also to make its dividend more sustainable over the long term by steadily lowering its payout ratio. Once the company gets to it the level targeted in 60%, plans to resume dividend growth.

With a yield of 5% and earnings growing by more than 5%, Dominion already has the power to produce double-digit annualized total returns in the coming years. However, a sale would allow investors potential they buy stocks at a lower valuation and higher yield, which could supercharge their returns in the subsequent recovery.

Steady growth ahead

Brookfield Infrastructure’s dividends currently yield more than 4%. The company plans to increase this payout by 5% to 9% annually over the next few years.

Several factors influence this view. The company derives 90% of its revenue from regulated rate structures or long-term contracts, with 85% either indexed or inflation-protected. With inflation continuing to rise, Brookfield expects that funds from operations (FFO) per share to grow 3% to 4% annually from inflation-driven rate increases alone.

Meanwhile, volume growth is expected as the global economy expands to add another 1%-2% to the bottom line each year. In addition, Brookfield is investing heavily in capital projects across its global infrastructure platforms, which should add another 2% to 3% to FFO per share each year.

The story continues

That trio of organic growth factors alone could fuel its dividend growth plan. However, Brookfield expects its active capital recycling strategy to boost its FFO growth rate in THE double digits. The company typically sells mature assets and uses the cash to fund incremental acquisitions.

Add the high dividend yield to the supercharged growth rate and Brookfield could easy generate total annual income in the mid-teens. Meanwhile, a sell-off could allow investors to buy shares even cheaper and get a higher yield and bigger upside potential from a future recovery.

Capitalizing on a sale can increase your revenue and profitability potential

Dominion and Brookfield Infrastructure offer already compelling total return potential fueled by their high-yielding dividends and visible earnings growth profiles. However, a sale could provide the opportunity to buy these dividend stocks at lower prices, allowing you to get an even more compelling return. This higher revenue stream would increase your overall return. Plus, you’d have even more upside potential as the stock recovers from its decline.

For this reason, both are great stocks to carry sale Watchlist now so you’re ready to pounce the next time the market drops unexpectedly.

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Matt DiLallo has positions in Brookfield Infrastructure Corporation and Brookfield Infrastructure Partners. The Motley Fool recommends Brookfield Infrastructure Partners and Dominion Energy. The Motley Fool has a disclosure policy.

2 Supercharged Dividend Stocks to Buy If There’s a Stock Market Selloff was originally published by The Motley Fool