Top Wall Street analysts like these 3 dividend stocks for passive income

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Top Wall Street analysts like these 3 dividend stocks for passive income

When markets falter, dividend stocks can provide investors' portfolios with the protection they need to weather volatile times.

However, finding the right dividend payers can be difficult. Investors can tap into the expertise of Wall Street analysts who can identify stocks with long-term growth potential and the ability to generate the solid cash flows needed to support ongoing dividends.

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

OneMain Holdings

This week's first dividend pick is OneMain Holdings (OMF), a financial services company focused on the needs of non-prime customers. The OMF share offers an attractive dividend yield of 8.1%.

In addition to regular dividends, the company also increases its shareholders' returns through share buybacks. In the fourth quarter, OneMain repurchased 531,000 shares for $20 million.

Recently, RBC Capital analyst Kenneth Lee updated his model and estimates for OMF stock, raising the price target from $50 to $55 to reflect a more favorable macroeconomic outlook. The analyst reiterated his buy rating on the stock, citing the company's reliable business model and ability to generate capital.

Lee said OMF's new price target is based on a price-to-tangible book value multiple (2025 estimate) of 2.9x. In his opinion, the company justifies a premium multiplier since it can achieve a very high return on the tangible common capital of more than 40%, with the cost of equity (under normalized conditions) estimated at 9% to 10% and the financing requirements It will be a growth expected to be in the mid to high single digits.

“We believe there could be significant opportunities for further growth in the non-prime personal loan markets, as loans represent only 16% of total non-prime unsecured loans,” Lee said.

Lee ranks No. 76 among more than 8,700 analysts tracked by TipRanks. Its ratings were profitable 68% of the time and delivered an average return of 17% each time. (See OneMain Holdings financial data on TipRanks)

Walmart

We switch to the wholesaler Walmart (WMT), which recently announced a roughly 9% increase in its annual dividend to 83 cents per share, marking the largest increase in over a decade. The announcement marked the 51st consecutive year of dividend increases for the company. Walmart pays a dividend yield of 1.4%.

After meeting with Walmart management, Jefferies analyst Corey Tarlowe reiterated his Buy rating on WMT stock with a price target of $70. Key highlights of the meeting included the analyst's observation that the company is seeing some signs of consumer stability. For one, customer experience score increased 140 basis points in fiscal 2024, which ended Jan. 31.

Tarlowe also noted increasing penetration of private label brands, an improved e-commerce shopping experience, better order economics with improved e-commerce margins in fiscal 2024, and an impressive increase in Sam's Club membership, which is expected to drive sales growth.

Additionally, the analyst is optimistic about the prospects for Walmart's international segment. He expects revenue to average high single-digit growth for the year and expects profit to more than double by fiscal 2028 compared to fiscal 2023.

Regarding WMT's advertising business, Tarlowe said: “Last year, WMT's global advertising business grew 28% to approximately $3.4 billion and we believe advertising continues to represent a significant opportunity for WMT going forward.”

Tarlowe is ranked 537th among more than 8,700 analysts tracked by TipRanks. Its ratings were profitable 65% of the time and delivered an average return of 14.6% each time. (See Walmart ownership structure on TipRanks)

SLB

This week's third dividend pick is the oilfield services company SLB (SLB). Earlier this year, the company reported better-than-expected fourth-quarter results and increased its quarterly cash dividend by 10%. SLB shares offer a dividend yield of 2%.

On April 1, Goldman Sachs added SLB to its U.S. Conviction List with a price target of $62, as analyst Neil Mehta believes the company is a leading energy services provider. Additionally, it is the preferred stock to participate in the growth of international and offshore oil services, with an attractive price-to-earnings ratio of 13x (based on 2025 earnings estimates).

Mehta also highlighted SLB's ability to generate strong free cash flow that can drive capital returns and growth investments. The analyst expects management to recover more than 60% of its free cash flow through share buybacks and dividends.

Furthermore, the analyst believes that SLB's digital business is underestimated. He explained: “We believe SLB is in a unique position to grow its digital business as the industry is not yet so digitalized and SLB is the only digital player in this space that has a competitive advantage.”

Mehta is ranked #176 among more than 8,700 analysts tracked by TipRanks. His reviews were successful 67% of the time, delivering an average return of 12.7% each. (See SLB stock buybacks on TipRanks)