Macroeconomic challenges and geopolitical tensions have weighed on investor confidence, upending major averages over the past week.
Investors looking for stability may want to look into dividend-paying stocks.
They can follow the recommendations of Wall Street analysts, who conduct in-depth analysis of the financial data of dividend-paying companies and assess their ability to grow their 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.
Enterprise Product Partners
The first dividend stock this week is Enterprise Product Partners (EPD), a provider of midstream energy services. The Partnership has increased its cash distributions for 25 consecutive years at a compound annual growth rate of 7%.
On April 5, Enterprise Products announced a quarterly cash distribution of $0.515 per unit, payable on May 14. This payment reflects a 5.1% year-over-year increase. EPD stock offers an attractive dividend yield of 7.1%.
Following the investor update call held earlier this month, RBC Capital analyst Elvira Scotto reiterated a Buy rating on EPD stock with a price target of $35. The analyst said the call supports his view that the company is well positioned to benefit from its organic growth plans, which are expected to come online through 2026.
Scotto added that the company’s organic projects (like the Mentone West 2 natural gas processing plant in Delaware) are primarily focused on the Permian Basin, where it expects steady growth for at least 10 years. .
The analyst is confident in EPD’s ability to support its growth investments, thanks to a strong operational base and balance sheet. Additionally, she expects mid-single-digit growth in the company’s distributions.
“EPD remains comfortable returning 55-60% of its adjusted CFO (operating cash flow) to investors through distributions and repurchases,” Scotto said.
Scotto ranks 84th among more than 8,700 analysts tracked by TipRanks. Its ratings have been profitable 64% of the time, each providing an average return of 17.8%. (See EPD technical analysis on TipRanks)
Goldman Sachs
Move to Goldman Sachs (GS), one of the leading investment banks in the United States. The bank recently reported better-than-expected first-quarter results, driven by higher trading and investment banking revenue. The rebound in activities on the capital markets enabled it to achieve solid performances.
In the first quarter, Goldman Sachs returned $2.43 billion of capital to shareholders through share repurchases worth $1.5 billion and dividends of $929 million. The bank declared a dividend of $2.75 per share, payable June 27. GS stock offers a dividend yield of 2.7%
Reacting to the impressive first quarter results, Argus analyst Stephen Biggar raised his rating on Goldman Sachs to buy from hold with a price target of $465, saying the results “demonstrated the considerable strengths of the Goldman franchise during an investment banking takeover.
Although there have been some appearances of false rebounds in the investment banking sector in 2023, the analyst believes that the current recovery appears to have the staying power. His optimism is supported by encouraging sequential improvement in equity and debt underwriting activities. He is further encouraged by the nearly 10% year-over-year growth in the value of M&A deals announced industry-wide in the first quarter.
Biggar expects these factors to lead to improved revenue in the second half of 2024. He pointed to data from the Securities Industry and Financial Markets Association, which indicates a triple-digit year-over-year increase in capital formation in the first quarter of 2024. Notably, the value of IPO issues jumped 239%, while secondary issues jumped 110% in the first quarter.
Biggar ranks 603rd among more than 8,700 analysts tracked by TipRanks. Its ratings have been profitable 60% of the time, each providing an average return of 11.8%. (See Goldman Sachs stock buybacks on TipRanks)
Cisco Systems
Finally, let’s look Cisco Systems (CSCO), a network equipment manufacturer. During the second quarter of fiscal 2024, the company returned a total of $2.8 billion to shareholders in the form of stock repurchases and dividends of 39 cents per share.
Cisco announced a roughly 3% increase in its dividend to 40 cents per share, effective for payment in April 2024. The stock has a dividend yield of 3.3%.
On April 15, Bank of America Securities analyst Tal Liani upgraded Cisco Systems to buy from hold and increased the price target from $55 to $60, citing valuation and three catalysts: tailwinds from AI, the growth of the security sector and the synergies from the recently completed project. Splunk acquisition.
“We expect networks to begin to standardize and experience renewed growth, driven by Cisco’s share gains in the development of Ethernet-based AI-driven hyperscalers,” Liani said.
Although the analyst agrees that the next two quarters could continue to be under pressure, he says that this downward trend is fully reflected in Wall Street’s expectations. He believes that management’s orientations are sufficiently conservative.
At the same time, Liani expects growth in the company’s security business to accelerate, driven by the stabilization of the firewall business and its recently launched products.
Liani ranks 532nd among more than 8,700 analysts tracked by TipRanks. Its ratings were successful 55% of the time, each delivering an average return of 10.9%. (See Cisco ownership structure on TipRanks)
cnbctv18-forexlive
