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The S&P 500 index is hovering around an all-time high and on track to deliver another above-average year of gains. But not all stocks are sailing with the party boats down the river. Industrial conglomerate Honeywell International (HON +1.55%) is down 10.2% year to date, while Energy Transfer (ET 0.06%) has shed 16.1% of its value. Here's why these dividend stocks stand out as great buys now, especially for value investors looking to boost their passive income. The sum of three parts could be greater than the whole Daniel Foelber (Honeywell): Honeywell is an industrial conglomerate that is undergoing a monumental shakeup. In October 2024, the company announced that it would spin off its advanced materials business, now known as Solstice Advanced Materials, as a stand-alone publicly traded company. In November, activist investor Elliott Investment Management announced a more than $5 billion stake in Honeywell -- representing 3% to 4% ownership of the company. Elliott pushed Honeywell to split up its aerospace and automation segments, on top of the spinoff of the advanced materials business. Elliot argued that Honeywell would unlock more shareholder value through more focused entities instead of a conglomerate structure. Honeywell agreed, announcing the completion of its one-year comprehensive portfolio review in February 2025 that resulted in the decision to separate the automation and aerospace segments. It's been an awkward period for Honeywell investors as they await the first stage of the spinoff. The combined business has been doing better so far this year -- but only relative to the mediocre results investors have grown accustomed to in recent years. As you can see in the following chart, Honeywell's stock price and free cash flow have been down over the last five years, while revenue and earnings have grown at a sluggish pace. HON data by YCharts The waiting game will soon be over. On Oct. 16, Honeywell confirmed that Oct. 17 will mark the record date for the spinoff of Solstice Advanced Materials, meaning Honeywell shareholders as of record on Oct. 17 will receive one share of Solstice common stock for every four shares of Honeywell on Oct. 30. So investors who buy Honeywell at the time of this writing won't be getting Solstice shares, but rather, more concentration in the automation and aerospace businesses. Still, this is an incredible opportunity for investors to get Honeywell, as it exists today, at a great value, especially for folks who believe the spinoffs will be successful. Honeywell shares sport a price-to-earnings (P/E) ratio of 22.8 and a forward P/E of just 19 compared to a 10-year median P/E of 23.7. Honeywell's discounted valuation makes sense if its lackluster growth persists. But it's a bargain if Honeywell achieves even a fraction of the opportunities outlined in Elliott's 23-page letter to Honeywell. With Honeywell's stock down 11.1% year to date, now is the time for patient investors to scoop up shares of one of the best value plays in the industrial sector. This is particularly true for folks looking for stocks at attractive valuations in today's premium-priced market. Investors who prefer more certainty could wait to see how the Solstice spinoff plays out and for an updated timeline on the aerospace and automation segments. A dividend growth stock to buy on the dip Neha Chamaria (Energy Transfer): Shares of Energy Transfer have fallen 16% in 2025, as of this writing. Oil and natural gas prices have dipped in recent months, and Energy Transfer expects its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to grow by just about 4% this year. That, however, doesn't justify the stock's fall nor take away from its investing thesis. In fact, these kinds of dips are exactly when you'd want to jump in and buy the stock because lower commodity prices aren't a major concern for Energy Transfer. The company owns and operates over 140,000 miles of pipelines that move nearly 30% of all the natural gas produced in the U.S. It also transports crude oil, natural gas liquids (NGLs), liquefied natural gas (LNG), and refined products, and has an extensive midstream business focused on gathering, compressing, treating, blending, and processing natural gas. It's a huge business, but most importantly, Energy Transfer mainly provides services under long-term contracts for a fee. This means its revenue is predictable and cash flows steady even when oil and gas prices drop. Upstream energy companies are relatively highly exposed to price swings. ET data by YCharts That explains why low commodity prices this year haven't derailed Energy Transfer's growth plans or dividend growth. In the second quarter, Energy Transfer spent around $1 billion on growth and generated $1.96 billion in distributable cash flow. This full year, it is spending nearly $5 billion on several growth projects, including big ones like the Hugh Branson pipeline spanning 16 Texas counties and the Nederland Flexport NGL terminal, which is the world's second-largest NGL export facility. Despite all the heavy investments in growth, Energy Transfer is also confident of raising its annual dividend payout by 3% to 5%. That should support the stock's dividend yield, now standing at a solid 7.9%. As these expansion and growth projects kick in and start adding value, Energy Transfer's cash flows should go up regardless of where oil and gas prices are, supporting higher earnings and regular dividend increases. All of that growth should eventually drive Energy Transfer's stock price higher, which is why now's an excellent opportunity to buy the energy stock on a dip.
