When markets are volatile, dividend-paying stocks can provide investors’ portfolios with the protection they need to weather periods of volatility.
Finding the right dividend payers, however, can be difficult. Investors can turn to the expertise of Wall Street analysts who can identify stocks with long-term growth potential and the ability to generate the strong cash flow needed to support continued dividends.
Here are three attractive dividend stocks, according to top Wall Street experts on TipRanks, a platform that ranks analysts based on their past performance.
OneMain Holdings
This week’s top dividend pick is OneMain Holdings (OMF), a financial services company focused on the needs of non-prime customers. OMF stock offers an attractive dividend yield of 8.1%.
Besides regular dividends, the company also increases shareholder returns through share buybacks. In the fourth quarter, OneMain repurchased 531,000 shares for $20 million.
Recently, RBC Capital analyst Kenneth Lee updated his model and estimates for OMF stock and raised the price target from $50 to $55 to reflect a more favorable macroeconomic outlook. The analyst reiterated a Buy rating on the stock, citing the company’s reliable business model and ability to generate capital.
Lee said OMF’s new price target is based on a tangible price-to-book multiple (2025 estimate) of 2.9x. He believes the company deserves a premium multiple because it can generate a very high return on tangible equity of over 40%, with a cost of equity (under standardized conditions) estimated at between 9% and 10% and financial claims. expected to grow between 5 and 10%.
“In our view, there could be significant opportunities for further growth in the unprimed personal loan markets, as loans represent only 16% of total unsecured unsecured credit,” Lee said.
Lee ranks 76th among more than 8,700 analysts tracked by TipRanks. Its ratings have been profitable 68% of the time, each providing an average return of 17%. (See OneMain Holdings financials on TipRanks)
Walmart
We’re moving to the big box retailer Walmart (WMT), which recently announced a roughly 9% increase in its annual dividend to 83 cents per share, marking its biggest increase in more than a decade. The announcement marks the company’s 51st consecutive year of dividend increases. Walmart pays a dividend yield of 1.4%.
Following a meeting with Walmart management, Jefferies analyst Corey Tarlowe reiterated a Buy rating on WMT stock with a $70 price target. One of the highlights of the meeting was the analyst’s observation that the company is seeing some signs of consumer stability. On the one hand, the customer experience score increased by 140 basis points in fiscal 2024, which ended on January 31.
Tarlowe also noted growing private label penetration, an improved online shopping experience, better order economics with improved e-commerce margins in fiscal 2024, and an impressive increase in membership at Sam’s Club which should stimulate turnover growth.
Additionally, the analyst is optimistic about the prospects of Walmart’s international segment. It expects its sales to see high single-digit average annual growth and forecasts that profits will more than double by fiscal 2028 compared to fiscal 2023.
Commenting on WMT’s advertising business, Tarlowe said: “Last year, WMT’s global advertising business grew 28% to approximately $3.4 billion and we believe advertising remains a significant opportunity for WMT in the future.
Tarlowe ranks 537th among more than 8,700 analysts tracked by TipRanks. Its ratings have been profitable 65% of the time, each providing an average return of 14.6%. (See Walmart’s ownership structure on TipRanks)
SLB
This week’s third dividend pick is an oilfield services company SLB (SLB). Earlier this year, the company reported better-than-expected fourth-quarter results and increased its quarterly cash dividend by 10%. SLB stock offers a dividend yield of 2%.
On April 1, Goldman Sachs added SLB to its U.S. conviction list with a price target of $62, with analyst Neil Mehta considering the company to be a leading energy services provider. It is also the preferred stock for exposure to growth in international and offshore oilfield services, at an attractive price-to-earnings multiple of 13x (based on 2025 earnings estimates).
Mehta also highlighted SLB’s ability to generate significant free cash flow, which can drive capital returns and growth investments. The analyst expects management to return more than 60% of its free cash flow via share repurchases and dividends.
Furthermore, the analyst believes that SLB’s digital business is underestimated. He said: “We believe SLB is in a unique position to grow its digital business given that the sector is not as digitized and SLB is the only digital provider in the space that has a competitive advantage.
Mehta ranks 176th among more than 8,700 analysts tracked by TipRanks. Its ratings were successful 67% of the time, each delivering an average return of 12.7%. (See SLB stock buybacks on TipRanks)
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