Even with the major averages recently rising to new record highs, there are plenty of catalysts that could shake things up, including geopolitical tensions and the upcoming US presidential election.
Investors looking for some stability in their portfolios may want to consider high-quality dividend stocks, especially those with a track record of consistent income payments.
Analysts conduct comprehensive research on companies' fundamentals and their ability to pay and increase profits in the long term.
Here are three attractive dividend stocks, according to Wall Street's top experts at TipRanks, a platform that ranks analysts based on their past performance.
Enbridge
Energy Infrastructure Company Enbridge (ENB) is the first dividend-paying pick this week. The company transports approximately 30% of North America's crude oil production and approximately 20% of the natural gas consumed in the United States.
Enbridge has increased its dividend for 29 years. The dividend yield is 7.7%.
Following a recent Investor Day event, RBC Capital analyst Robert Cowan reiterated a Buy rating on ENB shares. The analyst believes that recent developments, including regulatory approval of the acquisition of East Ohio Gas, should support market confidence in the company's ability to grow its earnings.
Notably, East Ohio Gas is the largest of the three utilities (the others being Questar Gas and North Carolina Public Service Company) that Enbridge has agreed to acquire from Dominion Energy.
“Dominion facilities represent the next link in Enbridge’s series of growth platforms,” Cowan said.
The analyst highlighted that the company has extended its growth targets to 2026 and now expects EBITDA growth in the range of 7% to 9% from 2023 to 2026. This compares to a previous growth forecast of 4% to 2026. 6% from 2026. 2022 to 2025. In addition, the company expects that these forecasts will enable it to increase its annual profits.
Cowan is ranked No. 191 out of more than 8,700 analysts tracked by TipRanks. His evaluations were successful 67% of the time, with each generating an average return of 10.2%. (See Enbridge hedge fund activity on TipRanks)
American bank
Next is American bank (BAC), one of the world's leading banking institutions. The bank returned $12 billion to shareholders through dividends and stock buybacks in 2023.
The bank declared 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 steadily helping the bank achieve improved 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 common equity ratio of 11.8% and a supplementary leverage ratio of 6.1% as of December 31, 2023.
“Also, given its strong capital position and pre-tax revenues, it should be able to pay and grow its dividend throughout the downturn,” Cassidy said.
The analyst highlighted the bank's growing deposit market share, its dominant position in global capital markets, and the stock's attractive valuation. BAC's profitability is expected to benefit from increased adoption of its mobile offerings.
Cassidy is ranked No. 143 out of more than 8,700 analysts tracked by TipRanks. His evaluations were successful 62% of the time, with each generating an average return of 14.9%. (See BAC technical analysis on TipRanks)
PepsiCo
This week's third earnings pick is the snack and beverage giant PepsiCo (beep). Last month, the company reported better-than-expected fourth-quarter earnings, even as its revenue fell and missed analysts' expectations due to pressure on demand in its North American business.
However, PepsiCo reported a 7% increase to its annual dividend to $5.42 per share, effective with the dividend due in June 2024. This increase marks the 52nd consecutive year it has boosted its dividend. PepsiCo currently has a dividend yield of 2.9%.
Overall, PepsiCo targets cash returns to shareholders of about $8.2 billion in 2024, including $7.2 billion in dividends and $1 billion from stock repurchases.
On March 18, Morgan Stanley analyst Dara Mohsenian upgraded PepsiCo shares to buy from hold with a price target of $190. The analyst cited two reasons for the stock's previous downgrade – valuation concerns and his opinion that consensus organic sales growth guidance (OSG) looks too high.
However, Mohsenian noted, “Both of these issues have now emerged, and we will be aggressive buyers here ahead of a strong turn in the second half after PEP hit fundamental lows in the first quarter, and we return to a higher level of consensus and its OSG counterpart, with valuation pressure exaggerated.” PEP”.
The analyst selected PepsiCo as a top pick, arguing that the market is not fully pricing in the growth prospects of the company's international business.
Mohsenian is ranked No. 383 out of more than 8,700 analysts tracked by TipRanks. Analyst ratings were profitable 68% of the time, with each generating an average return of 9.2%. (See PepsiCo stock buybacks on TipRanks)
