The "Great Rotation" Out of Artificial Intelligence (AI) Stocks Has Arrived. Here's What Smart Money Is Buying Instead.

Artificial intelligence (AI) is an important technology. However, like the internet, it seems investors have pushed AI stocks to the point where an investment bubble has formed. The internet boom ended with the dot-com crash, and Wall Street appears increasingly concerned that the AI bubble will soon burst, too.

If you are worried about that outcome, as well, you may want to do the smart thing and focus on safer investments. A good place to look is reliable dividend stocks like Dividend King Procter & Gamble (NYSE: PG), giant net lease REIT Realty Income (NYSE: O), and clean power provider Brookfield Renewable (NYSE: BEP)(NYSE: BEPC). Here's a quick look at each one.

Procter & Gamble sells everyday needs

Procter & Gamble is one of the world's largest consumer staples companies. It makes products like toothpaste, toilet paper, and cleaning products. Consumers continue buying these items no matter what is happening with the economy or the stock market. It is a very reliable business that can stand toe-to-toe with any competitor in terms of its brands, distribution, marketing, and innovation.

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The real proof of that is found in this Dividend King's streak of 69 annual dividend increases. You can't build a record like that by accident. Add in an attractive 2.9% dividend yield, and this is a great alternative for investors worried about the increasing volatility of AI stocks.

Realty Income has a size advantage

Realty Income is a net lease real estate investment trust (REIT). Net leases require tenants to pay most property-level operating costs. It is a relatively low-risk investment approach in the REIT sector, and many companies use the net lease model. However, Realty Income is the largest, with a portfolio of over 15,500 properties spread across the United States and Europe.

The company's scale and investment-grade-rated balance sheet give it an advantage in accessing capital markets. A lower cost of capital allows Realty Income to compete aggressively for properties. But there's an even more interesting data point to consider. Even during the Great Recession, Realty Income's occupancy didn't fall below 96%.

If the AI bubble does burst, taking the economy with it as the dot-com bubble did, Realty Income's strong operating history suggests you'll be able to count on its dividends continuing without interruption. Its 31-year streak of annual increases is proof of the dividend's resilience. Realty Income's yield is a lofty 5.1%.

Brookfield Renewable supports AI in an important way

If you don't want to completely avoid AI, then Brookfield Renewable could be a good choice for you. This globally diversified clean energy business is working with companies leaning into AI, like Google and Microsoft (NASDAQ: MSFT), as they look to build data centers. The clean power Brookfield Renewable is providing isn't optional; AI can't exist without electricity. So even if the AI bubble bursts, electricity providers like Brookfield Renewable will likely continue to see strong demand for their products and services.

There are two ways to buy Brookfield Renewable: a corporate share class that has a 3.6% yield and a partnership unit that has a 4.6% yield. They both represent the same entity and have the same dividend; the yield difference is because there is more demand for the corporate class. That's likely because many investors either can't or don't want to own a partnership. Both are reliable dividend stocks backed by a business that should fare just as well during an AI bubble as after it pops.

Watching dividends lets you focus on something other than the market

It is difficult to watch stock prices fall, particularly when the decline comes from the heights of an investment bubble. P&G, Realty Income, and Brookfield Renewable are all reliable income stocks that should be able to keep paying you right through even the worst market environments, including the implosion of the AI investment bubble. But the real reason that smart investors buy stocks like these is that they allow investors like you to focus on reliable dividend checks instead of volatile stock prices.

Reuben Gregg Brewer has positions in Brookfield Renewable Partners, Procter & Gamble, and Realty Income. The Motley Fool has positions in and recommends Microsoft and Realty Income. The Motley Fool recommends Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.