Although major averages have recently reached new record highs, there are many catalysts that could move things forward, including geopolitical tensions and the upcoming U.S. presidential election.
Investors looking for some stability in their portfolio may want to consider high-quality dividend stocks, especially those with a history of consistent income payments.
Analysts conduct in-depth research into companies’ fundamentals and their ability to pay and grow dividends over the long term.
Here are three attractive dividend stocks, according to top Wall Street experts on TipRanks, a platform that ranks analysts based on their past performance.
Enbridge
Energy infrastructure company Enbridge (IN B) is this week’s top dividend-paying pick. The company transports nearly 30% of North America’s crude oil production and approximately 20% of the natural gas consumed in the United States.
Enbridge has been increasing its dividend for 29 years. Its dividend yield is 7.7%.
Following its recent investor day, RBC Capital analyst Robert Kwan reiterated a Buy rating on ENB stock. The analyst believes that recent developments, including regulatory approval of the East Ohio Gas Company acquisition, would increase market confidence in the company’s ability to grow earnings.
It’s worth noting that East Ohio Gas is the largest of three utilities (the other two are Questar Gas and the Public Service Company of North Carolina) that Enbridge agreed to acquire from Dominion Energy.
“Dominion Utilities represents the next installment in Enbridge’s growth platform series,” Kwan said.
The analyst highlighted that the company has extended its growth targets to 2026 and now expects earnings before interest, tax, depreciation and amortization growth of between 7% and 9% between 2023 and 2026. This compares to previous growth outlook of 4% to 2026. 6% from 2022 to 2025. Additionally, the company anticipates that this forecast will allow it to increase its annual dividend.
Kwan ranks 191st among more than 8,700 analysts tracked by TipRanks. Its ratings were successful 67% of the time, each generating an average return of 10.2%. (See Enbridge hedge fund activity on TipRanks)
Bank of America
The next step is Bank of America (BAC), one of the leading banking institutions in the world. The bank returned $12 billion to shareholders through dividends and share buybacks in 2023.
The bank announced a dividend of 24 cents per share for the first quarter of 2024, payable on March 29. BAC stock offers a dividend yield of 2.6%.
Recently, RBC Capital analyst Gerard Cassidy reiterated a buy rating on Bank of America with a price target of $39. The analyst is optimistic about the leadership of Chairman and CEO Brian Moynihan, who is helping the bank gradually generate better profitability through a focus on expenses and strong credit underwriting principles.
Cassidy also noted that BAC has a strong balance sheet, with a Tier 1 capital ratio of 11.8% and a supplementary leverage ratio of 6.1% as of December 31, 2023.
“Furthermore, due to its strong capital position and PPNR (revenue before taxes and provisions), it should be able to pay and grow its dividends throughout a recession,” Cassidy said.
The analyst highlighted the bank’s growing share of the deposit market, its dominant position in global capital markets and the attractive valuation of the stock. He expects BAC’s profitability to benefit from increased adoption of its mobile offerings.
Cassidy ranks 143rd among more than 8,700 analysts tracked by TipRanks. Its ratings were successful 62% of the time, each generating an average return of 14.9%. (See technical analysis of BAC on TipRanks)
PepsiCo
This week’s third dividend pick is the snack and beverage giant PepsiCo (DYNAMISM). Last month, the company reported better-than-expected fourth-quarter earnings, although revenue fell and missed analysts’ expectations due to demand pressure in the North American sector.
Nonetheless, PepsiCo announced a 7% increase in its annualized dividend to $5.42 per share, effective with the dividend payable in June 2024. This increase marks the 52nd year.sd consecutive year in which it increased its dividend payout. PepsiCo currently has a dividend yield of 2.9%.
Overall, PepsiCo is targeting a cash return to shareholders of approximately $8.2 billion in 2024, including $7.2 billion in dividends and $1 billion in share repurchases.
On March 18, Morgan Stanley analyst Dara Mohsenian upgraded PepsiCo stock to buy with a price target of $190. The analyst cited two reasons behind an earlier downgrade in the stock: valuation concerns and his view that consensus forecasts for organic sales growth (OSG) appeared too high.
However, Mohsenian noted: “Both of those issues are now resolved, and we would be aggressive buyers here ahead of a sharp inflection in the second half after the PEP basically bottomed out in the first quarter, and we get back above of the consensus and the OSG of our peers, with an exaggerated valuation compression of the PEP. “.
The analyst named PepsiCo as a top pick, saying the market is not fully pricing in the growth prospects of the company’s international business.
Mohsenian ranks 383rd among more than 8,700 analysts tracked by TipRanks. Analyst ratings have been profitable 68% of the time, each generating an average return of 9.2%. (See PepsiCo stock buybacks on TipRanks)
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