Top Wall Street analysts expect these dividend stocks to enhance total returns
Top Wall Street analysts expect these dividend stocks to enhance total returns


A Home Depot location in Encinitas, California.

Mike Blake | Reuters

With the late 2023 rally underway, traders can bolster their portfolios by including a choose group of dividend payers into the combo.

Dividend-paying stocks give traders a mix of potential worth appreciation and earnings, which may enhance total returns.

Bearing that in thoughts, listed here are 5 engaging dividend stocks, in accordance to Wall Street’s prime specialists on TipRanks, a platform that ranks analysts primarily based on their previous efficiency.

Energy Transfer

First on this week’s record is Energy Transfer (ET), a restricted partnership that operates a diversified portfolio of power property within the U.S., with practically 125,000 miles of pipelines. ET not too long ago completed its acquisition of Crestwood Equity Partners.

In October, ET declared a quarterly money distribution of $0.3125 per common unit for the third quarter, which was paid on Nov. 20. The inventory has a dividend yield of 9%.

Commenting on the third-quarter outcomes, RBC Capital analyst Elvira Scotto stated that Energy Transfer delivered a stable efficiency, with adjusted earnings earlier than curiosity, taxes, depreciation and amortization exceeding the consensus estimate by 7%. The analyst additionally famous the rise within the 2023 midpoint adjusted EBITDA outlook by $300 million.

Scotto expects the Crestwood acquisition to provide business synergies. Further, she identified that ET intends to preserve a powerful stability sheet, aiming for leverage of 4.0-4.5x debt/EBITDA. Also, ET goals to proceed to return money to unitholders by way of elevated distribution and potential buybacks.  

“With excessive return progress tasks, accretive acquisitions and its built-in asset footprint throughout hydrocarbons and basins, we imagine ET can generate important money stream within the coming years,” stated Scotto.

Scotto elevated her worth goal on Energy Transfer to $19 from $18 and reiterated a purchase score, calling the inventory a compelling funding alternative. She ranks No. 54 amongst greater than 8,700 analysts tracked by TipRanks. Her rankings have been worthwhile 65% of the time, with every delivering a median return of 18.1%. (See Energy Transfer Insider Trading Activity on TipRanks) 

Sunoco LP

Scotto can also be upbeat about one other restricted partnership: Sunoco (SUN), one of many main motor gas distributors within the U.S.

For the third quarter, Sunoco introduced a quarterly cash distribution of $0.8420 per unit, paid on Nov. 20. The firm’s dividend yield stands at 6.3%.

After Sunoco posted its quarterly outcomes, Scotto raised the value goal for SUN inventory to $57 from $51 to replicate a better earnings outlook. The analyst reiterated a purchase score, saying that the corporate’s volumes and margins surpassed her estimates.  

The analyst thinks that the corporate’s scale, procurement potential and decrease price construction in contrast to the trade allow it to ship past the trade’s breakeven margin.

“SUN continues to preserve a powerful stability sheet exiting 3Q23 with leverage of three.9x and total liquidity of $1.1BN, which supplies SUN with important monetary flexibility to pursue progress alternatives together with acquisitions.”

Overall, Scotto stays bullish on Sunoco due to its stable money flows and deal with breakeven margins and expense administration. (See Sunoco Hedge Funds Trading Activity on TipRanks) 

VICI Properties

Our subsequent dividend inventory is VICI Properties (VICI), an actual property funding belief. VICI owns a stable portfolio of gaming, hospitality, and leisure properties, together with the properties of the enduring Caesars Palace Las Vegas and MGM Grand.

For the third quarter, the corporate declared a cash dividend of $0.415 per share, reflecting a 6.4% improve. VICI provides a dividend yield of 5.4%.

In a current analysis notice, Stifel analyst Simon Yarmak, who ranks 573rd out of greater than 8,700 analysts tracked by TipRanks, reiterated a purchase score on VICI inventory and known as it one in all his prime concepts within the North American triple-net REITs sector.

Yarmak famous that VICI has carried out effectively in each gaming and non-gaming classes. He added that VICI’s tenants stay in a powerful place.

“VICI has negotiated favorable escalators in its leases, which offer robust inside progress. Many of these escalators are linked to uncapped CPI progress (50.0% of hire) and, subsequently, VICI ought to profit from significant lease escalations within the above-average inflationary setting,” famous Yarmak.

The analyst estimates that lease escalations would generate about $71 million of incremental hire in 2024, which was not captured within the 2023 outcomes. He expects VICI to publish a number of the finest year-over-year progress in 2024 within the triple-net sector, with practically 4.5% to 5.0% adjusted funds from operations progress.

Yarmak’s rankings have been profitable 54% of the time, with every one delivering a median return of 8%. (See VICI’s Options Activity on TipRanks)

Home Depot

We transfer to house enchancment retailer Home Depot (HD). The firm exceeded analysts’ fiscal third-quarter estimates regardless of a decline in gross sales due to stress in sure big-ticket, discretionary classes. However, the corporate narrowed its full-year outlook due to macro pressures.

For the third quarter, the corporate declared a money dividend of $2.09 per share, payable on Dec. 14. HD’s dividend yield stands at 2.6%.

Following the fiscal third-quarter outcomes, JPMorgan analyst Christopher Horvers lowered the value goal for HD inventory to $318 from $332 however maintained a purchase score, saying that Home Depot is managing effectively in opposition to a troublesome backdrop.

The analyst thinks that administration’s tone was much less optimistic versus the second quarter however not worse than the primary quarter. While the house enchancment class is anticipated to stay beneath stress within the first half of 2024, comparable gross sales are projected to get well within the second half.

“We imagine HD stays top-of-the-line long-term tales in retail given company-specific gross sales and margin initiatives, the duopoly/AMZN-resistant nature of the trade, and important monetary and working leverage that amplifies EPS progress in higher gross sales environments,” stated Horvers.

Horvers ranks No. 520 amongst greater than 8,700 analysts on TipRanks. His rankings have been worthwhile 61% of the time, with every delivering a median return of 8%. (See Home Depot’s Technical Analysis on TipRanks)

Walmart

We lastly have a look at big-box retailer Walmart (WMT). Earlier this yr, the corporate introduced a 2% improve in its annual dividend per share to $2.28. This marked the 50th consecutive year of dividend hikes for the corporate, giving Walmart the tag of a dividend king. The inventory provides a dividend yield of 1.5%.

Recently, the retailer beat analysts’ fiscal third-quarter earnings and gross sales expectations. However, it cautioned traders about subdued client spending.  

Following the print, Guggenheim analyst Robert Drbul reaffirmed a purchase score on the inventory with a worth goal of $180. The analyst famous that Walmart witnessed stable visitors progress throughout bodily shops and digital channels. He elevated his full-year gross sales estimates to replicate upbeat Q3 efficiency however maintained his fiscal 2024 and 2025 adjusted earnings per share estimates due to further expense pressures. 

“We proceed to imagine Walmart is effectively positioned in an unsure macro setting with its worth and worth proposition and with elevated comfort and assortment,” stated Drbul.   

The analyst added that given the inventory’s 1.5% dividend yield and the truth that it is buying and selling at 22.3 occasions his fiscal 2025 EPS estimate of $7, WMT inventory provides one thing for earnings, worth and progress traders.

Drbul holds the 652nd place amongst greater than 8,700 analysts on TipRanks. His rankings have been profitable 59% of the time, with every delivering a median return of 5.9%. (See Walmart’s Financial Statements on TipRanks).



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