3 Dividend Stocks You'll Regret Not Buying on the Dip

This year, the stock market rallied sharply following a bear market decline in 2022, with the S&P 500 recently up more than 15%. However, not all stocks have gotten the memo that we're in rally mode.

Stanley Black & Decker (NYSE:SWK), Brookfield Infrastructure Partners (NYSE:BIP), and Brookfield Renewable (NYSE:BEP)(NYSE:BEPC) are all down considerably from their 52-week highs. Those dips have caught the attention of a few Fool.com contributors. Here's why they think investors should take advantage of their sell-offs to add the trio's now even more attractive dividends to their portfolios.

Earnings growth could be huge in 2024

Reuben Gregg Brewer (Stanley Black & Decker): This one isn't for the faint of heart, but Stanley Black & Decker's turnaround is starting to gain traction. Investors still aren't convinced, leaving the stock 55% below its 2021 highs.

SWK data by YCharts

At first glance, the industrial toolmaker's second-quarter 2023 earnings were terrible. Sales fell 5% year over year. Adjusted gross margin of 23.6% was down from 27.9% a year ago. And the adjusted loss of $0.11 per share compared to a profit of $1.77 in the same stanza of 2022.

But there was some good news, too, with management reporting that gross margin increased 50 basis points sequentially from the first quarter. That hints that the company's efforts to improve performance are starting to take shape. Meanwhile, the guidance range was narrowed to an adjusted per-share profit of $0.70 to $1.40. Although the top end of the range came down, the really important story is that the bottom end of the range rose from $0. It appears the company is going to avoid management's worst-case scenario.

And, lastly, during the earnings call, the company reaffirmed that it expects 2024 adjusted earnings to fall between $4 and $5 next year. That would be a huge improvement. With Stanley Black & Decker's dividend yield still near historically high levels at around 3.3%, value-focused income investors might want to act now before more evidence of this Dividend King's turnaround shows up.

An incredible investment opportunity

Matt DiLallo (Brookfield Infrastructure Partners): Units of Brookfield Infrastructure Partners are currently down about 25% from their 52-week high after dipping another roughly 10% in the past month. That sell-off has driven the global infrastructure partnership's dividend yield up to 4.7%. It also has the company trading at an incredible bargain.

Brookfield Infrastructure expects to grow its funds from operations (FFO) by more than 10% this year, implying it will generate about $3.00 per unit in 2023. Following the decline in its unit price, Brookfield recently traded around $33 apiece, putting its valuation at less than 11 times its FFO. That's extremely cheap. For comparison, the S&P 500 sells for more than 20 times earnings while the Nasdaq 100 fetches over 30 times earnings. Brookfield Infrastructure Partners is also much cheaper than its economically equivalent corporate twin, Brookfield Infrastructure Corporation (NYSE:BIPC). Corporate shares recently traded around $42 apiece, putting its valuation at 14 times FFO.

There's no discernable reason for the discounted valuation. Brookfield has grown its FFO at a double-digit pace for the past decade, and that pace should continue for the foreseeable future. Organic growth drivers like inflation-linked rate increases, volume growth as the global economy expands, and expansion projects should drive 6% to 9% annual FFO per unit growth. Organic growth should be toward the higher end over the next couple of years. The company recently completed one needle-moving expansion project -- its Heartland Petrochemical Complex in Canada. And it expects to finish another one next year -- its semiconductor manufacturing co-investment with Intel.

Meanwhile, its capital recycling program of selling mature assets and redeploying the proceeds into higher-returning opportunities should continue providing an additional boost to FFO. Brookfield has already secured three needle-moving investments. It expects its acquisition of Triton International to generate meaningful earnings accretion in the second half of this year. Meanwhile, its two data-center investments should boost FFO in 2024 and beyond.

Brookfield's growth drivers should give it the fuel to increase its already high-yielding distribution by 5% to 9% per year. Add in the upside from earnings growth and an eventual boost to its valuation, and it looks like an incredible investment opportunity right now.

An ultra-reliable dividend stock

Neha Chamaria (Brookfield Renewable): The markets often fail to give some stocks their due. Brookfield Renewable, whether units of the partnership or corporate entity shares, have lost more than 30% value in one year. For income investors, any dip here is an opportunity to own a rock-solid dividend stock.

There's no dearth of growth opportunities for one of the world's largest renewable-energy companies. A sibling to Brookfield Infrastructure, it operates across all major clean-energy technologies, including hydropower, wind, solar, and energy storage in four continents; and demand for these should only grow alongside decarbonization. Brookfield Renewable already has a humongous development pipeline of more than 130 gigawatts, or more than four times its existing operational capacity.

The best part is its cash-flow profile. Brookfield Renewable mainly sells electricity under power purchase agreements (PPAs), which are long-term contracts that ensure steady cash flows. To put that in perspective, 90% of Brookfield Renewable's cash flows are contracted, the average term comes from contracts, and its average PPA term is around 14 years. When a company can generate such steady and predictable cash flows, it can comfortably pay regular dividends.

Brookfield Renewable, in fact, has grown its dividend payout at a compound annual rate of 6% since 2001. That dividend growth is the biggest reason the stock has generated such massive returns for shareholders over the years.

BEP data by YCharts

Brookfield Renewable shares have been feeling the heat of late, but the drop makes no sense, as the company recently reported a 10% growth in funds from operations for its last quarter and has several impending acquisitions. Above all, its long-term target to grow dividends annually by 5% to 9% makes this stock an alluring buy now.

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Matthew DiLallo has positions in Brookfield Infrastructure, Brookfield Infrastructure Partners, Brookfield Renewable, Brookfield Renewable Partners, and Intel and has the following options: long January 2025 $30 calls on Intel and short January 2025 $30 puts on Intel. Neha Chamaria has no position in any of the stocks mentioned. Reuben Gregg Brewer has positions in Stanley Black & Decker. The Motley Fool has positions in and recommends Brookfield Renewable. The Motley Fool recommends Brookfield Infrastructure Partners, Brookfield Renewable Partners, and Intel and recommends the following options: long January 2023 $57.50 calls on Intel and long January 2025 $45 calls on Intel. The Motley Fool has a disclosure policy.