Dividend-paying stocks can increase investors' portfolio returns and provide security in volatile markets.
Investors can follow Wall Street analysts' ratings to select stocks of dividend-paying companies that have attractive growth prospects, which could lead to increasing earnings and cash flows, enabling higher dividends.
Here are three attractive dividend stocks according to Wall Street's top experts on TipRanks, a platform that ranks analysts based on their past performance.
Northern Oil and Gas
The first dividend stock this week is Northern Oil and Gas (STILL). The company is engaged in the acquisition, exploration and production of oil and natural gas properties, primarily in the Williston, Permian and Appalachian basins.
NOG paid a dividend of 40 cents per share for the first quarter, an increase of 18% year over year. The stock offers a dividend yield of 4.1%. The company also increased shareholder returns through $20 million worth of share repurchases in the first quarter of 2024.
NOG recently announced an agreement to acquire a 20% undivided interest in XCL Resources' Uinta Basin assets for $510 million. The deal will be completed in partnership with SM Energy.
In response to the news, RBC Capital analyst Scott Hanold reiterated his buy rating on NOG shares with a price target of $46. After speaking with management, the analyst noted that similar to NOG's strategy in the Permian and Williston Basins, there is the potential for further expansion in the Uinta Basin through additional deals.
Hanold said the deal is in line with NOG's strategy of partnering with high-profile operators such as SM Energy to capitalize on lucrative opportunities. “This is NOG's fourth major joint venture [joint venture] and contributes significantly to its diversity, yields and inventory reserve,” he said.
The analyst raised his 2025 earnings per share and cash flow per share estimates by 11% to 12% and increased his free cash flow per share forecast by 10% as the XCL deal is significantly accretive to earnings. He believes the solid free cash flow outlook could allow NOG to raise its base dividend. Hanold expects a 10% to 15% dividend increase in 2025.
Hanold ranks 23rd among more than 8,900 analysts tracked by TipRanks. His ratings have been profitable 67% of the time, generating an average return of 26.7%. (See NOG share buybacks on TipRanks)
JPMorgan Chase
JPMorgan Chase (JPM), the largest U.S. bank by assets, is the next dividend favorite. Last month, the bank announced plans to increase its dividend by about 9% to $1.25 per share for the third quarter of 2024. JPM offers a dividend yield of 2.2%.
JPM emphasized that this potential third-quarter dividend increase would be the second dividend increase this year. In March 2024, the bank announced an increase in its dividend from $1.05 to $1.15 per share. In addition, JPM's board of directors has approved a new $30 billion share buyback program, effective July 1, to increase shareholder returns.
Recently, RBC Capital analyst Gerard Cassidy reiterated his buy rating on JPM stock with a price target of $211. The analyst cited several reasons for his bullish investment thesis, including a strong management team, JPM's impressive business units, which are among the three largest in the banking sector, and a solid balance sheet.
“We believe the company will achieve greater profitability by achieving economies of scale in its consumer and capital markets businesses by taking market share from its weaker competitors,” Cassidy said.
The analyst also highlighted JPM's well-diversified business model, which generates revenue from retail and community banking (41% of Q1 2024 revenue), corporate and investment banking (32%), wealth management (12%), commercial banking (9%) and commercial banking (5%).
Cassidy ranks 128th among more than 8,900 analysts tracked by TipRanks. His ratings have been successful 63% of the time and have produced an average return of 14.7%. (See JPM stock charts on TipRanks)
Walmart
Finally, we look at wholesale retail Walmart (WMT). Earlier this year, the company raised its dividend 9% to 83 cents per share. This increase was Walmart's 51st consecutive annual increase.
In the first quarter of the fiscal year, WMT paid out $2.73 billion to its shareholders in the form of dividends of $1.67 billion and share repurchases of $1.06 billion. With a payout ratio of 37.5%, the company sees the possibility of further dividend growth.
Recently, Jefferies analyst Corey Tarlowe reiterated his buy rating on WMT with a price target of $77 and said the stock remains his firm's top pick. The analyst believes Walmart is in the early stages of its journey into the world of artificial intelligence and automation.
Tarlowe believes AI and automation could help the company double its operating profit by fiscal 2029 compared to fiscal 2023, generating over $20 billion in additional earnings before interest and taxes. The analyst expects the increased operating profit to be due to several factors, including automation efficiency, advertising, anti-theft protection and autonomous driving.
Among recent AI developments, the analyst highlighted WMT's strategic investment and partnership with Fox Robotics, which is providing the world's first autonomous forklift. He also mentioned the use of automated receipt verification sheets at Sam's Club as part of the company's AI strategy.
“Overall, we expect WMT to capture an increasing share of customer spend through improved omnichannel capabilities, partnerships and services,” Tarlowe said.
Tarlowe is ranked 266th among more than 8,900 analysts tracked by TipRanks. His evaluations have been successful 67% of the time and have produced an average return of 19.7%. (See WMT technical analysis on TipRanks)