Macroeconomic problems and geopolitical tensions weighed on investor sentiment, causing the major averages to shake last week.
Investors looking for stability may want to turn to dividend-paying stocks.
They can follow the recommendations of Wall Street analysts, who conduct a comprehensive analysis of the financial statements of dividend-paying companies and evaluate their ability to grow their profits over 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.
Enterprise Product Partners
The first dividend of the week is Enterprise Product Partners (EPD), a medium energy services provider. The limited partnership has increased its dividend for 25 consecutive years at a compound annual growth rate of 7%.
On April 5, Enterprise Products declared a quarterly cash dividend of $0.515 per unit, payable on May 14. This payment reflects an increase of 5.1% year-on-year. EPD stock offers an attractive dividend yield of 7.1%.
Following the company's 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 supported her view that the company is well positioned to benefit from organic growth projects, which are expected to be operational until 2026.
Scotto added that the company's organic projects (such as 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 another 10 years.
The analyst is confident in EPD's ability to support its growth investments, thanks to its strong base of operations and balance sheet. Furthermore, it expects mid-single-digit growth in the company's dividend.
“EPD remains comfortable returning 55 to 60% of adjusted CFO (cash flow from operating) to investors through distributions and repurchases,” Scotto said.
Scotto is ranked No. 84 out of more than 8,700 analysts tracked by TipRanks. Their valuations were profitable 64% of the time, with each achieving an average return of 17.8%. (See EPD technical analysis on TipRanks)
Goldman Sachs
Let's move on Goldman Sachs (GS), one of the leading investment banks in the United States, recently reported better-than-expected first-quarter results, driven by higher revenues from its banking and investment businesses. The recovery in capital market activities helped achieve a strong performance.
In the first quarter, Goldman Sachs returned $2.43 billion of capital to shareholders through $1.5 billion in stock buybacks and $929 million in dividends. The bank declared a dividend of $2.75 per share, payable on June 27. GS stock offers a dividend yield of 2.7%.
In response 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 significant strengths of the Goldman franchise during the investment banking recovery.”
While there have been some signs of a false bounce in investment banking in 2023, the analyst believes the current recovery appears to have the potential to continue. His optimism is supported by the encouraging sequential improvement in the equity and debt guarantee business. It is also encouraged by the significant year-on-year growth in the value of M&A deals announced industry-wide in the first quarter.
Biggar expects these factors to improve revenues in the second half of 2024. He highlighted data from the Securities Industry and Financial Markets Association, which indicates a three-digit year-over-year increase in capital formation in the first quarter of 2024. It is worth noting that the value of initial public offering issues jumped by 239%, while secondary issuances increased by 110% in the first quarter.
Biggar is ranked No. 603 out of more than 8,700 analysts tracked by TipRanks. His evaluations were profitable 60% of the time, with each generating an average return of 11.8%. (See Goldman Sachs stock buybacks on TipRanks)
Cisco Systems
Finally, let's look Cisco Systems (CSCO), a maker of networking equipment. In the second quarter of fiscal 2024, the company returned a total of $2.8 billion to shareholders through share repurchases and a dividend of 39 cents per share.
Cisco announced a roughly 3% increase in its dividend to 40 cents per share, starting with payment in April 2024. The stock has a dividend yield of 3.3%.
On April 15, Bank of America Securities analyst Tal Lianey upgraded Cisco Systems to buy from hold and increased his price target to $60 from $55, citing valuation and three catalysts: AI-related tailwinds, growth in the security business, and synergies from the project. Which was recently completed. Acquire Splunk.
“We expect networking to start to normalize and see renewed growth driven by Cisco stock gains in Ethernet-based AI builds for hyperscalers,” Liani said.
While the analyst agrees that the next two quarters may continue to be under pressure, he stresses that this downward trend is fully reflected in Wall Street's forecasts. He believes management's guidance is conservative enough.
Meanwhile, Liani expects the growth of the company's security business to accelerate, driven by stability in the firewall space and its recently launched products.
Liani ranks 532nd among more than 8,700 analysts tracked by TipRanks. His evaluations were successful 55% of the time, with each generating an average return of 10.9%. (See Cisco's ownership structure on TipRanks)
