3 Magnificent S&P 500 Dividend Stocks Down 25%+ to Buy and Hold Forever

Despite some volatility earlier this year, the S&P 500 has rallied about 10% over the last 12 months. However, while most stocks are up in the past year, several have missed the market's current rally.

Alexandria Real Estate Equities (NYSE: ARE), Oneok (NYSE: OKE), and PepsiCo (NASDAQ: PEP) are currently down more than 25% from their 52-week highs. The silver lining to their sell-offs is that dividend yields move in the opposite direction of stock prices. Because of that, they currently offer much higher yields. With magnificent records of growing their payouts, they're great stocks to buy and hold for a potential lifetime of dividend income.

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A healthy dividend

Alexandria Real Estate Equities' stock price has tumbled over the past year due to slowing demand for lab space. As a result, the healthcare REIT's yield has risen above 7%.

However, the life science real estate pioneer has one of the largest and highest-quality portfolios in the sector, leased to a leading tenant group. Because of that, it generates durable and high-quality cash flows, 57% of which it pays out in dividends. That conservative payout ratio enables it to retain meaningful excess free cash flow to fund development projects. Alexandria also has a fortress balance sheet, giving it significant financial flexibility.

Alexandria is investing heavily in developing and redeveloping more lab space for the life science sector. These projects will supply it with incremental streams of durable rental income as they stabilize in the coming years. That should enable the REIT to continue increasing its dividend. It has grown its payout at a 4.5% average annual rate over the past five years.

A lot of fuel to continue growing

Oneok's stock price has tumbled due in part to lower oil prices. That has driven up the energy midstream company's dividend yield to around 5%.

However, the pipeline company has demonstrated the durability of its integrated midstream platform over the years. It has grown its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for 11 straight years (and at an impressive 16% annualized rate), which included two significant oil market downturns. Fueling that growth has been a combination of organic expansion and value-enhancing acquisitions.

Oneok's durable midstream business model has enabled it to deliver more than a quarter century of dividend stability and growth. While the pipeline company hasn't increased its payout every single year, it has nearly doubled its payment over the past decade.

The company is targeting to increase its dividend by 3% to 4% annually in the future. It should have plenty of fuel to achieve that target. Oneok expects to continue benefiting from a recent string of acquisitions, which should continue boosting its bottom line through 2027 as it captures deal synergies. In addition, the company has several expansion projects underway, including an export terminal and related pipeline that should enter commercial service in early 2028.

A satisfying income stream

PepsiCo's stock slump has pushed the food and beverage giant's dividend yield up toward 4.5%. That's a tasty yield for a company with PepsiCo's magnificent dividend-growth track record. It recently extended its growth streak to 53 straight years, keeping it in the elite group of Dividend Kings.

The company should have plenty of pop to continue pushing its payout higher. It's investing heavily to organically grow its revenue and bolster its margins through product innovation and productivity enhancements. PepsiCo anticipates these investments will drive 4% to 6% annual organic revenue growth and high-single-digit earnings-per-share (EPS) increases over the long term.

PepsiCo also has a strong balance sheet, which it's using to accelerate the transformation of its portfolio toward healthier options. It recently closed its $1.7 billion deal for healthier soda maker Poppi and acquired Siete and Sabra. These deals should enhance its ability to continue increasing its dividend in the future.

A great time to buy these top dividend stocks

Shares of Alexandria Real Estate Equities, Oneok, and PepsiCo have sold off over the past year. Because of that, these magnificent dividend growth stocks currently offer much higher yields. With more growth ahead, they're great dividend stocks to buy and hold for a potential lifetime of income.

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Matt DiLallo has positions in PepsiCo. The Motley Fool has positions in and recommends Alexandria Real Estate Equities. The Motley Fool recommends Oneok. The Motley Fool has a disclosure policy.