Even though the major averages have recently hit new records, there are many 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, particularly those with a track record of consistent income payments.
Analysts conduct in-depth research into companies’ fundamentals and their ability to pay and grow dividends in the long term.
Here are three attractive dividend stocks, according to top Wall Street experts on TipRanks, a platform that ranks analysts based on their past performance.
Enbridge
Energy infrastructure company Enbridge (ENB) is the top pick that pays dividends this week. The company moves nearly 30% of North American crude oil production and approximately 20% of the natural gas consumed in the United States
Enbridge has increased its dividend for 29 years. It has a dividend yield of 7.7%.
Following the recent Investor Day event, RBC Capital analyst Robert Kwan reiterated a Buy rating on ENB shares. The analyst believes that recent developments, including regulatory approval of the acquisition of East Ohio Gas Company, would support market confidence in the company’s ability to grow its earnings.
It’s worth noting that East Ohio Gas is the largest of the three utilities (the other two are Questar Gas and Public Service Company of North Carolina) that Enbridge has agreed to acquire from Dominion Energy.
“Dominion Utilities represents the next installment in Enbridge’s growth platform series,” Kwan said.
The analyst pointed out that the company has extended its growth targets through 2026 and now expects earnings before interest, taxes, depreciation and amortization growth of 7% to 9% from 2023 to 2026. This compares with the previous growth outlook of 4%-4%. 6% from 2022 to 2025. Additionally, the company expects this forecast will allow it to increase its annual dividend.
Kwan ranks 191st among more than 8,700 analysts tracked by TipRanks. His valuations were successful 67% of the time, each generating an average return of 10.2%. (See Enbridge hedge fund activity on TipRanks)
Bank of America
The next one is Bank of America (BAC), one of the main banking institutions in the world. The bank returned $12 billion to shareholders through dividends and share repurchases in 2023.
The bank announced a dividend of 24 cents per share for the first quarter of 2024, payable on March 29. BAC shares offer a dividend yield of 2.6%.
Recently, RBC Capital analyst Gerard Cassidy reiterated a Buy rating on Bank of America with a $39 price target. The analyst is optimistic about the leadership of President and CEO Brian Moynihan, who is helping the bank consistently generate improved profitability by focusing on expenses and strong credit underwriting principles.
Cassidy also noted that BAC has a strong balance sheet, with a Common Equity Tier 1 capital ratio of 11.8% and a supplementary leverage ratio of 6.1% as of December 31, 2023.
“Furthermore, due to its strong capital position and PPNR (earnings before taxes and provisions), it should be able to pay and increase its dividend during a 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. He expects BAC’s profitability to benefit from increased adoption of its mobile offerings.
Cassidy ranks 143rd among more than 8,700 analysts tracked by TipRanks. His valuations were successful 62% of the time, each generating an average return of 14.9%. (See BAC Technical Analysis on TipRanks)
PepsiCo
This week’s third dividend is the snack and beverage giant PepsiCo (PEP). Last month, the company reported better-than-expected earnings for the fourth quarter, even as its revenue fell and missed analysts’ expectations due to demand pressure in the North American sector.
Nonetheless, PepsiCo announced a 7% increase in its annualized dividend to $5.42 per share, effective from the dividend payable in June 2024. This increase marked the company’s 52nd year of operation.nd consecutive year in which it increased its dividend payment. PepsiCo currently has a dividend yield of 2.9%.
Overall, PepsiCo is targeting a cash return to shareholders of about $8.2 billion in 2024, including $7.2 billion in dividends and $1 billion in share repurchases.
On March 18, Morgan Stanley analyst Dara Mohsenian upgraded PepsiCo shares to Buy from Hold with a $190 price target. The analyst cited two reasons behind the stock’s previous downgrade: valuation concerns and his opinion that the consensus forecast for organic sales growth (OSG) seemed too high.
However, Mohsenian noted, “Both of these issues have now resolved themselves, and we would be aggressive buyers here for a powerful inflection in the second half after PEP bottoms in the first quarter, and returns above consensus and Peer OSG, with excessive PEP rating compression.” .”
The analyst singled out PepsiCo as the top pick, arguing that the market is not fully pricing in the growth prospects of the company’s international business.
Mohsenian ranks 383rd among more than 8,700 analysts tracked by TipRanks. Analyst ratings were profitable 68% of the time, each generating an average return of 9.2%. (See PepsiCo stock buybacks on TipRanks)