In a world where macro uncertainty looms over the stock market, investors are continuously on the lookout for reliable sources of income to help bolster their portfolios during turbulent times. One way investors can achieve this is by incorporating dividend-paying stocks into their investment strategy. Wall Street analysts, known for their expertise and insights, can provide guidance on the best dividend stocks to consider. According to TipRanks, a platform that ranks analysts based on their past performance, there are three highly recommended dividend stocks to explore.
Chord Energy (CHRD), an oil and gas operator in the Williston Basin, is one of the top picks among Wall Street’s finest. Earlier this year, the company declared a base-plus-variable cash dividend of $3.25 per share, demonstrating its commitment to rewarding shareholders. Siebert Williams Shank analyst Gabriele Sorbara recently initiated coverage of Chord Energy stock with a buy rating and a price target of $262. This bullish outlook is attributed to the company’s attractive valuation and strong capital returns strategy.
Sorbara highlighted Chord Energy’s peer-leading capital returns framework, emphasizing its goal of returning more than 75% of free cash flow to shareholders through dividends and buybacks. The analyst expects significant capital returns of $778.8 million and $1.15 billion in 2024 and 2025, respectively. These projections indicate capital return yields of 6.6% and 9.7%, surpassing industry averages.
With a solid track record in the Williston basin and a promising inventory runway of oil locations, Chord Energy is poised for growth. Sorbara believes that the company’s focus on wider spacing, longer laterals, and acquisition synergies will drive capital efficiencies and position CHRD as a standout player in the basin. Additionally, the analyst foresees upside potential in key metrics such as production, EBITDA, and free cash flow, fueled by strategic moves like the Enerplus acquisition and enhanced capital efficiencies.
Energy Transfer (ET), a master limited partnership (MLP) operating in the midstream energy sector, is another dividend stock worth considering. With a vast network of over 125,000 miles of pipelines and related infrastructure, ET plays a crucial role in the energy industry. The company recently announced an increase in its quarterly cash distribution to $0.3175 per common unit for the first quarter of 2024, reflecting a 3.3% year-over-year boost.
Mizuho analyst Gabriel Moreen, recognizing Energy Transfer’s potential, raised the price target for the stock to $19 and reiterated a buy rating. Moreen believes that ET stands out among its midstream peers, poised for growth despite facing challenges. The analyst sees ET’s solid free cash flow outlook and leverage in the Permian basin as key drivers of future success.
Moreen emphasized the importance of a clear capital allocation framework for Energy Transfer to boost investor confidence and maximize its healthy free cash flow yield. With a discounted valuation and significant upside potential in equity return, ET emerges as a top pick in the midstream sector. Investors looking for a reliable dividend stock with growth prospects may find Energy Transfer appealing.
As one of the most iconic beverage companies globally, Coca-Cola (KO) has maintained its reputation as a dividend king with a track record of consistent dividend increases. Earlier this year, Coca-Cola raised its quarterly dividend by 5.4% to $0.485 per share, marking the 62nd consecutive year of dividend hikes. With a dividend yield of 3.1%, KO remains an attractive choice for income-seeking investors.
In light of Coca-Cola’s better-than-expected first-quarter results and raised organic revenue growth forecast, RBC Capital analyst Nik Modi reiterated a buy rating on KO stock with a price target of $65. Modi commended Coca-Cola for surpassing organic growth expectations and highlighted the company’s robust underlying fundamentals.
Modi expressed confidence in Coca-Cola’s restructuring efforts and organizational design changes, which are expected to enhance resource allocation and drive market share growth. Despite challenges posed by a strong dollar, Modi remains optimistic about Coca-Cola’s revenue and earnings momentum, especially if the U.S. dollar weakens. With a significant international presence, Coca-Cola is well-positioned for growth and could capitalize on market trends to deliver shareholder value.
Overall, by diversifying your portfolio with dividend stocks like Chord Energy, Energy Transfer, and Coca-Cola, you can navigate uncertain market conditions with confidence. These top picks recommended by Wall Street analysts offer income potential and long-term growth prospects, making them valuable additions to any investor’s portfolio.