Investors in pursuit of a steady income flow often seek to enhance their portfolios through the inclusion of appealing dividend stocks.
Given the extensive array of companies offering dividends, navigating through them for thorough analysis and selecting the optimal ones can prove challenging for investors. In light of this, insights from leading analysts can serve as valuable guidance in informing investors’ choices.
Here are three dividend stocks deemed attractive by the foremost experts on Wall Street, as per TipRanks, a platform renowned for ranking analysts based on their historical performance:
“Given the large universe of dividend-paying companies, it can be difficult for investors to conduct an in-depth analysis and pick the right stocks. To this end, insight from the top analysts can help inform investors’ decisions.”
Energy Transfer
This week’s initial dividend stock spotlights Energy Transfer (ET), a master limited partnership (MLP) in the energy sector. The company operates an extensive network of over 125,000 miles of pipelines and associated energy infrastructure.
Earlier this year, Energy Transfer declared a quarterly cash distribution of $0.3150 per common unit for the fourth quarter of 2023, marking a 3.3% increase compared to the previous year. With an annualized distribution per unit of $1.26, ET stock presents an enticing yield of 8.4%.
After the company’s fourth-quarter performance announcement, Stifel analyst Selman Akyol reiterated a buy rating for ET stock with a target price of $18 per share.
Akyol observed that the earnings before interest, taxes, depreciation, and amortization (EBITDA) for Q4 2023 surpassed market expectations, with Energy Transfer guiding 2024 adjusted EBITDA in the range of $14.5 billion to $14.8 billion.
Akyol underscored that Energy Transfer is operating within the lower threshold of its leverage range.
The management indicated a potential reduction in debt to maintain additional cash reserves, allowing for the potential pursuit of further mergers and acquisitions. Regarding the Crestwood acquisition, annual synergies of $80 million by 2026 are anticipated, with $65 million expected to materialize in 2024.
Additionally, the management expressed intentions to contemplate increasing distributions and executing opportunistic buybacks.
Akyol remarked, “We believe ET will generate well over $1 billion of FCF [free cash flow] after distribution in 2024, which could be geared towards incremental growth projects or potential unit buybacks.”
Akyol holds the No. 396 position among over 8,700 analysts monitored by TipRanks. His ratings have seen success 67% of the time, yielding an average return of 6.9% per recommendation.
Garmin
Moving on to the navigation device manufacturer Garmin (GRMN), the company has impressed investors with its fourth-quarter earnings, surpassing expectations, and robust guidance, primarily attributed to the strength exhibited in its auto and fitness divisions.
Garmin disclosed a quarterly dividend of 73 cents per share, slated for payment on March 29. Moreover, it plans to propose a 2.7% dividend increase to 75 cents per share at the forthcoming annual shareholders meeting in June.
Additionally, the company unveiled a new share repurchase initiative of up to $300 million valid until December 2026. GRMN stock boasts a dividend yield of 2.1%.
Ivan Feinseth, an analyst at Tigress Financial, recently reaffirmed a buy rating for GRMN stock while elevating the price target to $175 from $165.
Feinseth underscored that the company’s revenue for Q4 2023 and the full fiscal year benefitted from robust demand for its advanced smart wearables, several product launches, and the positive momentum in the auto OEM (original equipment manufacturer) sector.
Highlighting Garmin’s solid financial position and cash flow, Feinseth emphasized its capability to invest in new product development, pursue strategic acquisitions, and enhance shareholder returns.
The analyst also noted the company’s intensified focus on automotive product development, particularly through OEM collaborations with major auto industry players and the introduction of new automotive specialty products.
Feinseth commented, “GRMN’s diversified product lines and industry-leading products position it to benefit from new opportunities in all its key markets, including Aviation, Automotive, Fitness, Marine, and Outdoor pursuits.”
Feinseth holds the No. 233 position among over 8,700 analysts monitored by TipRanks. His ratings have yielded a success rate of 61%, with an average return of 12.1% per recommendation.
Target
The third highlighted dividend choice for this week is Target (TGT), which outperformed expectations in fourth-quarter revenue and earnings despite enduring macroeconomic pressures that persistently impact the retailer’s operations.
In response to the challenging macroeconomic environment, the company is concentrating on enhancing profitability through refined inventory management and heightened operational efficiency.
Target’s quarterly dividend of $1.10 per share demonstrates a 1.9% increase compared to the previous year and offers a dividend yield of 2.6%. Impressively, Target has consistently raised its dividends for 52 consecutive years.
Buoyed by the fourth-quarter results, Jefferies analyst Corey Tarlowe reaffirmed a buy rating for TGT stock and adjusted the price target to $195 from $170.
Tarlowe highlighted that the retailer’s fourth-quarter revenue saw a 10% increase in other revenue, propelled by robust growth in advertising. The analyst anticipates further growth as Target intensifies its advertising endeavors.
Furthermore, Tarlowe emphasized that while Target slightly exceeded fourth-quarter revenue expectations, investors were particularly impressed by the company’s nearly 100 basis points beat in operating margin. The analyst is encouraged by Target’s advancements in inventory management, shrink reduction, and enhancements in both in-store and supply chain efficiencies.
Maintaining an optimistic outlook on Target’s long-term prospects, Tarlowe concluded, “TGT has a clean inventory position and is continuing to overcome temporary margin challenges, potentially unlocking margin recapture opportunities.”
Tarlowe currently holds the 399th position among more than 8,700 analysts monitored by TipRanks. His ratings have proven successful 67% of the time, with each generating an average return of 17%.
