As stock markets grapple with ongoing volatility, investors seeking a stable income stream are increasingly turning to dividend stocks as an attractive addition to their portfolios. However, choosing the right dividend stocks from a vast array of options can be a daunting task. This is where the insights from top Wall Street analysts can prove invaluable. These experts provide buy ratings based on comprehensive evaluations of a company’s fundamentals and its capacity to maintain consistent dividend payments.
Here, we explore three dividend-paying stocks that have garnered attention from esteemed Wall Street professionals, as monitored by TipRanks, a platform that ranks analysts based on their historical performance.
First on the list is Ares Capital (ARCC), a prominent business development company specializing in financing solutions for middle-market businesses. The firm recently reported fourth-quarter earnings that surpassed expectations and declared a dividend of 48 cents per share for the upcoming quarter, scheduled for March 31. Offering a notable dividend yield of 9.64%, ARCC has caught the eye of RBC Capital analyst Kenneth Lee, who reaffirmed a buy rating on the stock. Although he slightly reduced his price target from $23 to $22, Lee remains optimistic about ARCC’s robust history of risk management and competitive advantages. He pointed out that despite recent concerns regarding software lending, especially in light of potential disruptions caused by artificial intelligence, ARCC’s credit performance remains strong. As evidence, non-accruals have remained steady at 1.8% of the portfolio, and the internal risk grade has not fluctuated. Furthermore, management has indicated minimal near-term AI risks, reinforcing Lee’s bullish outlook on the company’s prospects.
Next is ConocoPhillips (COP), a leader in oil and gas exploration and production. The company recently unveiled its fourth-quarter results and announced a dividend of 84 cents per share for the first quarter. ConocoPhillips returned $9 billion, or 45% of its cash flow from operations, to shareholders through dividends and share buybacks. Despite current challenges in the natural gas market, Goldman Sachs analyst Neil Mehta maintained his buy rating and increased the price target from $115 to $120. Mehta’s confidence in COP stems from its high-quality inventory, strong free cash flow, and commitment to shareholder returns. He highlighted the company’s goal of achieving $7 billion in incremental free cash flow by 2029, backed by significant projects coming online. Mehta remains optimistic about the oil supply-demand dynamics shifting positively in the near future, expecting COP to align with its long-standing cash return practices.
Finally, Devon Energy (DVN), which boasts a diversified multi-basin portfolio in the oil and gas sector, also made headlines this week. The company announced an all-stock merger with Coterra Energy (CTRA), which will position it as a major player in the Permian Basin. Following the merger, Devon plans to increase its quarterly dividend to 31.5 cents per share, significantly higher than its current fixed payment of 24 cents. Additionally, the company has authorized a $5 billion share repurchase, pending board approval. This restructuring has prompted Siebert Williams Shank analyst Gabriele Sorbara to reiterate a buy rating on Devon and raise the price target from $50 to $55. Sorbara anticipates that the merger will enhance discounted cash flow per share and reduce net debt to EBITDA leverage, which could bolster Devon’s competitive stance against peers like EOG Resources and Diamondback Energy. He expects the integration of Coterra to yield significant operational and financial synergies by 2027.
As these stocks are featured, investors are advised to keep a keen eye on the performance metrics provided by these analysts, which can guide informed decisions in the ever-fluctuating market landscape.
