Top Wall Street analysts say buy these dividend stocks for enhanced returns

The ongoing market volatility continues so as to add to traders’ woes, making it tough for them to choose the suitable stocks.

However, it’s at all times higher to have a longer-term funding horizon and look for names that may improve complete returns with secure dividends and capital appreciation.

To that finish, listed here are 5 enticing dividend stocks, in keeping with Wall Street’s high specialists on TipRanks, a platform that ranks analysts primarily based on their previous efficiency.

This week we’ll first take a look at a high-dividend yield inventory Ares Capital (ARCC). Ares is a enterprise improvement firm that gives a spread of financing options to the center market. The firm lately reported a beat on third-quarter earnings, pushed by larger rates of interest and continued steady credit score high quality.

The firm additionally declared a dividend of 48 cents per share for the fourth quarter, payable on Dec. 28. ARCC affords a dividend yield of 9.8%.  

Commenting on the Q3 outcomes, RBC Capital analyst Kenneth Lee famous that credit score efficiency remains to be good, with loans on non-accrual standing declining barely quarter-over-quarter to a really low 1.2% of the portfolio (on an amortized value foundation). That stated, he thinks that non-accruals may rise someday subsequent yr.

The analyst highlighted different positives for Ares Capital, together with portfolio diversification. The analyst additionally thinks that the corporate’s dividends are strongly backed by its core earnings per share technology and potential internet realized beneficial properties.

Lee reiterated a buy score on ARCC inventory with a value goal of $21 saying, “We nonetheless favor ARCC’s robust observe file of managing dangers by the cycle, well-supported dividends, and scale benefits.”

Lee ranks No. 251 amongst greater than 8,500 analysts tracked by TipRanks. His scores have been worthwhile 57% of the time, with every delivering a median return of 12.6%. (See ARCC Stock Charts on TipRanks)  

Next on this week’s record is banking large Citigroup (C). In October, the financial institution delivered better-than-anticipated results for the third quarter, fueled by energy in its institutional shoppers and private banking models. Citi lately introduced a large reorganization that will simplify its working mannequin and improve its enterprise.

The financial institution introduced a quarterly dividend of 53 cents per share, payable on Nov. 22. Citi’s dividend yield stands at 5%.

BMO Capital analyst James Fotheringham famous that Citi’s Q3 outcomes had been pushed by higher-than-projected income (with internet curiosity revenue coming in 5% above consensus), decrease working bills, and decreased credit score prices.

The analyst raised his core earnings per share estimates for 2023, 2024, and 2025 by 11%, 6%, and three%, respectively, to replicate decrease than previously-modeled credit score prices and a slower-than-expected decline in internet curiosity margin.

Fotheringham additionally elevated his value goal for the inventory to $66 from $61 and reiterated a buy score, saying, “C is our high decide amongst large-cap banks; shares commerce on the largest low cost (by far) to TCE [total capital employed] among the many money-center banks.”   

Fotheringham holds the 372nd place amongst greater than 8,500 analysts on TipRanks. Moreover, 56% of his scores have been worthwhile, with every producing a median return of 9.4%. (See Citigroup Blogger Opinions & Sentiment on TipRanks)

Dividend aristocrat McDonald’s (MCD) lately reported its third-quarter results. The fast-food chain exceeded Wall Street’s expectations, due to larger costs that helped offset weak spot within the site visitors at U.S. eating places.

In early October, MCD announced a 10% hike in its quarterly dividend to $1.67 per share, which will probably be payable on Dec. 15. The firm has elevated its dividends for 47 consecutive years. The firm pays a dividend yield of two.5%.

BTIG analyst Peter Saleh, who ranks No. 667 amongst greater than 8,500 analysts on TipRanks, highlighted that the gross sales and earnings upside in MCD’s Q3 outcomes was coupled with fairly cautious feedback concerning the U.S. site visitors. Traffic had declined barely as a consequence of decreased frequency from lower-income prospects and strain within the “breakfast daypart.”

Nonetheless, the analyst famous that MCD nonetheless skilled extensive geographic energy and stays higher positioned than its rivals. Looking forward, Saleh expects the corporate to speed up its U.S. enlargement subsequent yr, along with his checks indicating that MCD has about 250 models within the pipeline. He additionally expects the corporate to have a larger give attention to worth and digital engagement, in addition to an enlargement of its automated order-taking expertise in 2024.

“We view McDonald’s as one of many strongest restaurant ideas on this planet that’s within the center phases of a multi-year gross sales restoration,” stated Saleh.

Saleh reiterated a buy score on McDonald’s inventory with a value goal of $300. His scores have been profitable 52% of the time, with every score delivering a median return of seven.9%. (See McDonald’s Financial Statements on TipRanks)

We now transfer to telecommunications large AT&T (T), which inspired traders by reporting sturdy subscriber additions for the third quarter, due to promotions and telephone upgrades. Furthermore, the corporate raised its full-year free money movement steerage to about $16.5 billion from $16 billion. AT&T affords a horny dividend yield of seven%.

On Oct. 26, Tigress Financial Partners analyst Ivan Feinseth reiterated a buy score on AT&T inventory with a value goal of $28. The analyst highlighted that the rise in Q3 subscribers and money movement mark a major flip in AT&T’s enterprise efficiency tendencies.

He added that whereas 2022 was a transitional yr, the corporate’s income, money movement and profitability will rise considerably in 2023 and past, with the long-term progress pushed by ongoing 5G and broadband rollout in enterprise communications.

“AT&T will more and more leverage its 5G high-speed fiber community to drive ongoing subscriber progress and additional improve its Edge Computing capabilities,” stated Feinseth.

The analyst famous that AT&T decreased its debt by over $3 billion in Q3 2023, which would scale back curiosity expense and drive larger funding in its connectivity enterprise. He thinks that the corporate will additional optimize its dividend payout ratio such that it will possibly assist ongoing investments whereas returning money to shareholders.

Feinseth holds the 453rd place amongst greater than 8,500 analysts on TipRanks. Moreover, 54% of his scores have been profitable, with every producing a median return of 8.2%. (See AT&T Hedge Fund Trading Activity on TipRanks)

Feinseth can be bullish on one other dividend inventory: big-box retailer Target (TGT). The analyst thinks that near-term pressures create a horny alternative to buy the inventory, as the corporate is well-positioned to drive income progress and profitability over the long run and additional improve shareholder worth.

The analyst expects Target’s a number of strengths — together with its loyal buyer base, working efficiencies and enhanced success capabilities — to assist it navigate ongoing shopper headwinds, advertising and marketing errors and stock shrink troubles.

Feinseth additionally highlighted that the retailer is enhancing its product choices by including a number of new merchandise throughout its main product strains. It can be increasing its footprint by opening new shops whereas transforming current ones. (See Target Insider Trading Activity on TipRanks)    

He identified that TGT initiated its dividend in 1967 and has elevated its dividend yearly since 1971. In June 2023, the corporate raised its quarterly dividend by about 2% to $1.10 per share, following a large 20% improve in June 2022 to $1.08 per share. TGT’s dividend yield stands at 3.9%.

Feinseth lowered TGT’s value goal to $180 from $215 as a consequence of near-term challenges however maintained a buy score, saying, “Increasing worth focus in shopper spending tendencies, and moderation in inflationary pressures and enter prices, will drive a reacceleration in Business Performance tendencies.”