3 Top Dividend Stocks I Just Bought as the Stock Market Corrected

As the stock market corrected, I saw an opportunity to bolster my retirement account with dividend stocks that offer both passive income and the potential for significant capital appreciation. Dividend stocks have historically outperformed non-payers, delivering more than double the total return over the last 50 years, according to data from Ned Davis Research and Hartford Funds. This outperformance, combined with the stability and growth potential of dividend-paying companies, makes them an attractive option during market volatility. Here are three top dividend stocks I recently added to my portfolio:

1. enbridge (ENB)

Enbridge is a Canadian pipeline and utility company that pays a 6.3% dividend yield, several times higher than the S&P 500's 1.59% dividend yield. The company's high-yielding payout is supported by a very stable cash flow, with about 98% of its earnings coming from cost-of-service or contracted assets. This ensures a steady income stream regardless of market conditions. Enbridge's strong investment-grade balance sheet and multibillion-dollar backlog of commercially secured capital projects under construction provide visibility into its future growth. The company has increased its dividend for 30 straight years, making it a reliable investment during market corrections.

2. invitation homes (INVH)

Invitation Homes is a real estate investment trust (REIT) that focuses on owning single-family rental properties. The company pays a 3.5% dividend yield and has increased its dividend every year since it became public in 2017. Invitation Homes' rental properties provide stable, growing rental income, with same-store net operating income (NOI) growth of 4.6% last year. The company benefits from strong demand for single-family rental properties, partly due to the continued high cost of buying a home. Invitation Homes' focus on markets with strong job and population growth helps drive higher demand for rental housing, positioning it well for continued dividend growth.

3. Kenvue (KVUE)

Kenvue is a consumer healthcare company that pays a 3.5% dividend yield. The company initiated its payout in 2023 following its separation from healthcare giant Johnson & Johnson. Kenvue's portfolio of iconic brands, including Band-Aid, Listerine, and Tylenol, generated nearly $15.5 billion in sales last year and $1.3 billion in free cash flow. This provides the cash to pay a growing dividend while maintaining its solid balance sheet. With sales and earnings expected to keep growing, Kenvue should be able to continue the legacy of Johnson & Johnson of annual dividend increases, making it a strong investment during market volatility.

Why These Stocks?

These three dividend stocks offer higher-yielding payouts that they've increased every year, which should continue. Because of that, they should be able to help me grow the value of my retirement account as they produce more income and their stock prices rise. During a market correction, these higher yields can provide a cushion against market volatility, as the steady income from dividends can help offset potential losses in stock prices. Additionally, the strong fundamentals of these companies, such as Enbridge's stable cash flow and Kenvue's iconic brands, can provide confidence in their ability to continue paying and increasing dividends even during economic downturns.

Visualization of Dividend Yields



Conclusion

In conclusion, dividend stocks like Enbridge, Invitation Homes, and Kenvue offer a compelling investment opportunity during market corrections. Their higher yields, consistent dividend growth, and strong fundamentals make them attractive options for investors seeking to grow their retirement nest egg during uncertain market conditions. As the stock market continues to correct, I will likely continue adding to my positions in these top dividend stocks.

Ask Aime: Why did the stock market correct and what are the investment opportunities?