Top Wall Street analysts favor these dividend stocks for better returns

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Top Wall Street analysts favor these dividend stocks for better returns

Dividend-paying stocks can help investors strengthen their portfolio and increase returns.

Investors looking for these names need to find companies that have a proven track record of making regular payments and have solid financials.

Here are three attractive dividend stocks according to Wall Street's top pros on TipRanks, a platform that ranks analysts based on their past performance.

Restaurants Darden

The first dividend share is Restaurants Darden (DRI), which operates several popular full-service dining brands, including Olive Garden, LongHorn Steakhouse and Yard House. The company recently reported mixed results for its fourth quarter of fiscal 2024. While Darden beat analysts' earnings expectations, its revenue fell slightly short of Wall Street consensus due to increased discounts from competitors.

Darden paid $628 million in dividends in fiscal 2024 and committed to $454 million in share buybacks. In addition, the company announced a dividend increase of nearly 7%, bringing the quarterly dividend to $1.40 per share. The stock has a dividend yield of 3.5%.

Following the earnings announcement, BTIG analyst Peter Saleh reiterated his buy rating on DRI stock with a price target of $175. The analyst emphasized that Darden's earnings per share forecast of $9.40 to $9.60 indicates a double-digit total return for shareholders on average, which is consistent with the company's long-term goals.

Saleh is confident the company can achieve its return targets, based on several factors including modest price increases, promotional initiatives and declining inflation.

“We view Darden Restaurants as one of the strongest operators in the industry with historical revenue and restaurant margin performance that has consistently outperformed its competitors,” said Saleh.

Saleh ranks 360th among more than 8,900 analysts tracked by TipRanks. His ratings have been successful 61% of the time, generating an average return of 11.7% each time. (See Darden's financial reports on TipRanks)

International sea routes

Next comes International sea routes (INSW), a tanker company that provides energy transportation services for crude oil and petroleum products. On June 26, the company paid a combined dividend of $1.75 per share. The company's combined dividend represented 60% of its first quarter adjusted net income.

In its first-quarter results, INSW highlighted that combined dividend payments of $5.74 per share over the past twelve months represented a dividend yield of over 13 percent.

After meetings with INSW management, Stifel analyst Benjamin Nolan reiterated his buy rating on the stock and raised his price target from $66 to $68. The analyst noted that the tanker market remains cyclically strong due to the continued increase in global oil consumption, limited supply of new vessels and longer average voyage durations due to ongoing geopolitical issues.

Accordingly, Nolan increased his rate assumptions for 2024 and 2025. The analyst expects International Seaways to continue to deliver higher cash flows due to a favorable environment in the tanker market.

Nolan expects INSW to pay large additional dividends as excess cash flow of $200 million to $300 million is expected after the investments (assuming no new debt related to tanker purchases). “We expect dividends of $5.51 per share for 2024, although there is still room for a little more,” the analyst said.

Nolan ranks 68th among more than 8,900 analysts tracked by TipRanks. His ratings have been successful 67% of the time, generating an average return of 19.5% each time. (See International Seaways stock charts on TipRanks)

Citigroup

Finally, let’s talk about this week’s third dividend stock, the banking giant Citigroup (C). With a quarterly dividend of 53 cents per share, Citigroup offers a yield of 3.3%.

On June 18, the bank held its Services Investor Day. Management expressed confidence in achieving its 2024 targets, driven by revenue growth across all core business areas despite macroeconomic uncertainty and the possibility of lower interest rates.

Following the event, Goldman Sachs analyst Richard Ramsden reiterated his buy rating on Citigroup shares and raised his price target slightly from $71 to $72. The higher price target reflects an increase in the analyst's EPS estimates for 2024, 2025 and 2026, based on management comments that suggested the bank's strategic transformation plan is gaining momentum.

Ramsden noted that Citi is strongly focused on its transformation efforts and that the bank is making steady progress in risk control and data quality. As for the services business, the analyst noted that management has set strategic priorities for this important component of the company's financial goals. The analyst estimates that the services business will account for 25% of the group's revenue growth by 2026.

“The services business is well positioned to maintain its market-leading position and has the potential to continue to gain market share across all business areas,” Ramsden said. The analyst's optimism is based on Citi's extensive global network in 95 countries, well-established long-term client relationships and market share gains that are expected to be driven by investments in technology and innovative offerings.

Ramsden is ranked 969th among more than 8,900 analysts tracked by TipRanks. His ratings have been successful 65% of the time, generating an average return of 11.9% each time. (See Citigroup technical analysis on TipRanks)