Macroeconomic issues and geopolitical tensions have weighed on investor sentiment and roiled major averages over the past week.
Investors looking for stability may want to look at dividend stocks.
You can follow the recommendations of Wall Street analysts who conduct an in-depth analysis of the financials of dividend-paying companies and evaluate their ability to increase their dividends in the long term.
Here are three attractive dividend stocks, according to Wall Street's top experts on TipRanks, a platform that ranks analysts based on past performance.
Enterprise Products Partner
This week's first dividend stock is Enterprise Products Partner (EPD), a midstream energy services provider. The limited partnership has increased its cash distributions for 25 consecutive years at a compound annual growth rate of 7%.
On April 5, Enterprise Products announced a quarterly cash distribution of $0.515 per unit, payable on May 14. This payment represents an increase of 5.1% year-over-year. The EPD share offers an attractive dividend yield of 7.1%.
Following the company's investor update call earlier this month, RBC Capital analyst Elvira Scotto reiterated her Buy rating on EPD stock with a $35 price target. The analyst said the call reinforces her view that the company is well positioned to benefit from its organic growth projects, which are expected to come online by 2026.
Scotto added that the company's organic projects (such as the Mentone West 2 natural gas processing plant in Delaware) are primarily focused in the Permian Basin, where the company expects to see steady growth for at least another 10 years.
The analyst is confident that EPD can support its growth investments thanks to a strong operating base and balance sheet. Additionally, it expects mid-single-digit growth in the company's distributions.
“EPD remains comfortable returning 55-60% of its adjusted CFO (cash flow from operations) to investors through distributions and buybacks,” Scotto said.
Scotto is ranked #84 among more than 8,700 analysts tracked by TipRanks. Their ratings were profitable 64% of the time and delivered an average return of 17.8% each. (See EPD technical analysis on TipRanks)
Goldman Sachs
Lets move on Goldman Sachs (G.S), one of the leading investment banks in the USA. The bank recently reported better-than-expected first-quarter results, driven by a rise in trading and investment banking revenue. A recovery in capital market activity contributed to solid performance.
In the first quarter, Goldman Sachs returned $2.43 billion of capital to shareholders through $1.5 billion in share repurchases 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 numbers, Argus analyst Stephen Biggar raised his rating on Goldman Sachs to “Buy on Hold” with a price target of $465, saying the results “extend the significant strengths of Goldman's business during a boom in investment banking.”
Although there have been some signs of a false recovery in the investment banking space in 2023, the analyst believes that the current recovery appears to have the power to last. His optimism is supported by encouraging sequential improvement in equity and debt operations. Furthermore, he is encouraged by the high year-on-year growth in the industry's announced value of M&A deals in the first quarter.
Biggar expects these factors to drive higher returns in the second half of 2024. He pointed to data from the Securities Industry and Financial Markets Association indicating a triple-digit year-over-year increase in capital formation in the first quarter of 2024. In particular, the number of IPO issuances increased by 239%, while secondary issuances increased by 110% in the first quarter.
Biggar is ranked #603 among more than 8,700 analysts tracked by TipRanks. Its ratings were profitable 60% of the time and delivered an average return of 11.8% each time. (See Goldman Sachs stock buybacks on TipRanks)
Cisco systems
Finally, let's take a look Cisco systems (CSCO), a network equipment manufacturer. In the second quarter of fiscal 2024, the company returned a total of $2.8 billion to shareholders through share repurchases and dividends of 39 cents per share.
Cisco announced a roughly 3% increase in its dividend to 40 cents per share, beginning payments in April 2024. The stock has a dividend yield of 3.3%.
On April 15, Bank of America Securities analyst Tal Liani upgraded Cisco Systems to “Buy” from “Hold” and increased the price target to $60 from $55. He pointed to valuation and three catalysts: AI-related tailwinds, growth in the security business and synergies from the recently completed Splunk acquisition.
“We expect the networking industry to begin to normalize and see renewed growth driven by Cisco's share gains in Ethernet-based AI developments from hyperscalers,” Liani said.
While the analyst agrees that the next two quarters could continue to be under pressure, he claims that this downward trend is fully reflected in Wall Street's expectations. He believes that management's guidelines are sufficiently conservative.
Meanwhile, Liani expects growth in the company's security business to accelerate, driven by stabilization in the firewall space and recently launched products.
Liani is ranked 532nd among more than 8,700 analysts tracked by TipRanks. Its ratings were successful 55% of the time, delivering an average return of 10.9% each time. (See Cisco ownership structure on TipRanks)