Market Rally Leaves Dividend Stocks Looking Cheap

The S&P 500's 15% surge over the past year has pushed valuations to stretched levels, with the index now trading at 25.3 times earnings while yielding just 1.2%. This market exuberance has created pockets of value in dividend growth stocks.

Brookfield Infrastructure (BIPC, BIP), Energy Transfer (ET), and W.P. Carey (WPC) now offer yields exceeding 4% despite strong fundamentals. Brookfield trades at a mere 12 times FFO with a 4.5% yield, projecting 10%+ annual growth through inflation-linked contracts and strategic acquisitions.

These infrastructure plays demonstrate how income investors can still find compelling opportunities despite broad market froth. Their combination of high single-digit organic growth and double-digit dividend growth potential creates an asymmetric return profile in today's expensive market.