A Walmart Supercenter during Walmart's multi-week Annual Deals Shopping Event in Burbank, California, on November 21, 2024.
Allen J. Cockroaches | Los Angeles Times | Getty Images
Investors can benefit by building a diversified portfolio of growth and dividend stocks and increasing their overall returns through capital appreciation and regular income.
With the Federal Reserve cutting interest rates by another 25 basis points, several investors are looking for lucrative dividend picks as the appeal of these stocks increases in a low interest rate environment. To this end, investors can follow the recommendations of leading Wall Street analysts and select reliable dividend stocks with solid fundamentals.
Here are three dividend stocks highlighted by Wall Street's top pros, tracked by TipRanks, a platform that ranks analysts based on past performance.
Walmart
We start this week with wholesalers Walmart (WMT), which has increased its dividend for 51 consecutive years. Last month, the company reported better-than-expected third-quarter results and raised its full-year outlook. The stock has a dividend yield of 0.9%.
Recently, Tigress Financial analyst Ivan Feinseth reiterated his Buy rating on WMT stock and increased the price target from $86 to $115. The analyst emphasized that the company continues to gain market share in the U.S., both in groceries and general merchandise categories, particularly among higher-income families.
Feinseth also noted that Walmart is using generative artificial intelligence and machine learning to improve customers' shopping experiences both in-store and online. In this regard, the analyst mentioned the company's generative AI-powered shopping assistant – currently in beta testing – which will help customers select products based on their individual needs.
The analyst noted that Walmart is also leveraging technology and automation to improve its operational efficiency and expand its supply chain and fulfillment capabilities to reduce costs and achieve greater profitability.
Feinseth also noted Walmart's other strengths, such as continued e-commerce growth, solid brand equity, growth in Walmart+ memberships and advertising growth. The analyst sees further upside potential in the stock, adding that “WMT also increases shareholder returns through ongoing dividend increases and share buybacks.”
Feinseth ranks 190th among more than 9,200 analysts tracked by TipRanks. Its valuations were profitable 62% of the time and delivered an average return of 14.4%. See Walmart stock buybacks on TipRanks.
Gaming and leisure properties
This week's next dividend stock is Gaming and leisure properties (GLPI), a real estate investment trust (REIT) that leases properties to gaming operators under triple-net lease arrangements. In a triple-net lease agreement, tenants are responsible for all costs associated with the leased assets, including facility maintenance and insurance, in addition to rent.
GLPI declared a fourth-quarter dividend of 76 cents per share, up 4.1% from a year earlier. GLPI offers an attractive yield of 6.5%.
In a recent research note on Net Lease REITs, RBC Capital analyst Brad Heffern highlighted that GLPI is part of RBC's Top 30 Global Ideas list. Heffern has a Buy rating on GLPI stock with a price target of $57.
The analyst expects GLPI's investment pipeline of over $2 billion to contribute significantly to future growth as the cap rates for the deals in the pipeline were largely negotiated in a higher interest rate environment. As a result, as interest rates fall, Heffern expects gambling capitalization rates to be “more stable” than other categories in the net leasing space, which would help maintain higher spreads.
In addition, GLPI recently entered into a $110 million term loan facility with the Ione Band of Miwok Indians to finance the tribe's new casino development near Sacramento. This marks the company's entry into the attractive tribal gaming space, with the possibility of further acquisitions serving as a potential catalyst for GLPI stock.
The analyst also highlighted other positive aspects such as GLPI's strong balance sheet, the likelihood of an improving credit rating and the attractive valuation given the company's high-quality cash flows.
Heffern is ranked #815 among more than 9,200 analysts tracked by TipRanks. His reviews were successful 47% of the time and delivered an average return of 9.7%. See GLPI ownership structure on TipRanks.
Ares Management
Finally, let's take a look Ares Management (ARES), an alternative investment manager offering investment solutions across all asset classes such as real estate, credit, private equity and infrastructure. Last month, the company declared a quarterly dividend of 93 cents per share on its Class A common stock, payable on Dec. 31. ARES offers a dividend yield of 2.1%.
As part of a broader research note on U.S. asset managers, RBC Capital analyst Kenneth Lee raised the price target on ARES shares from $185 to $205 and reiterated a Buy rating. As we enter 2025, Lee called ARES his “favorite name” in the U.S. wealth management sector due to the company’s dominance in the personal lending space.
Additionally, the analyst expects Ares Management to benefit from favorable trends in several markets such as private wealth and global infrastructure. Lee also emphasized that he raised price targets on ARES and the stocks of several other asset managers to reflect better macroeconomic conditions and the possibility of lower corporate taxes under President-elect Donald Trump's administration.
Overall, optimism about the “potential resilience of ARES’ fundraising dynamics” and the company’s asset-light model, coupled with high return on equity, support Lee’s bullish outlook on the stock.
Lee ranks No. 19 among more than 9,200 analysts tracked by TipRanks. Its valuations were profitable 73% of the time and delivered an average return of 18.8%. See Ares Management stock charts on TipRanks.