In this photo illustration, the Brookfield Infrastructure Partners company logo is seen on a smartphone screen.
Piotr Swat | Light rocket | Getty Images
Fears about the impact of a government shutdown, a labor market slowdown and high stock valuations are weighing on investor sentiment. Given the ongoing uncertainty, investors looking for stable returns may consider adding dividend stocks to their portfolio.
Recommendations from top Wall Street analysts can help investors select stocks of dividend-paying companies that have strong fundamentals that support consistent dividend payments.
Here are three dividend stocks highlighted by Wall Street's top pros, tracked by TipRanks, a platform that ranks analysts based on past performance.
Brookfield Infrastructure Partners
Topping this week's dividend list is Brookfield Infrastructure Partners (GDP), a global infrastructure company that owns and operates diversified, long-lived assets in utilities, transportation, midstream and data. BIP paid a dividend of 43 cents per unit on September 29, up 6% from a year earlier. With an annual dividend of $1.72 per share, BIP stock offers a dividend yield of 5.2%.
Following the recent Investor Day event, BMO Capital analyst Devin Dodge reiterated his Buy rating on Brookfield Infrastructure shares with a price forecast of $42. The 5-star analyst said management's presentations at the event reflected the robust underlying organic growth trends across the GDP portfolio, which he believes will become more evident in the coming quarters.
Dodge emphasized that the number of high-growth platforms in BIP's portfolio continues to increase and there are significant investment opportunities in most of its sectors. In particular, he mentioned the robust investment opportunities in digital infrastructure. With hyperscalers' capex expected to increase by 50% this year, there is strong growth potential for BIP's data center platforms in the medium term.
The analyst noted that BIP's funds from operations per unit (FFO) growth is nearing a tipping point. He noted that FFO per unit of GDP has grown at a compound annual growth rate of about 10% over the past five years, despite headwinds from foreign exchange rates and high interest rates. However, Dodge expects these challenges to moderate in the near term, which could lead to visible FFO growth.
“As FFO/unit growth shifts higher, we believe there is a positive impact on payout growth and valuation,” Dodge said. Interestingly, TipRanks' AI analyst rates BIP stock at Neutral with a price target of $33.
Dodge ranks No. 377 among more than 10,000 analysts tracked by TipRanks. His reviews were successful 73% of the time and delivered an average return of 13.2%. See Brookfield infrastructure stats on TipRanks.
Ares Capital
We switch to Ares Capital (ARCC), a specialty finance company that provides direct loans and other investments to private, mid-sized businesses. Ares pays a quarterly dividend of 48 cents per share. With an annual dividend of $1.92 per share, ARCC stock offers a yield of 9.4%.
In an update on business development companies, RBC Capital analyst Kenneth Lee reiterated a “buy” rating on Ares Capital shares with a $24 price target. Interestingly, TipRanks AI analyst has an “Outperform” rating on ARCC stock with a price target of $25.
In the current scenario, Lee prefers ARCC, Blackstone Secured Lending Fund (BXSL)And Sixth Street Specialty Lending (TSLX) Shares. “ARCC has a long track record of successfully managing risk across cycles,” noted Lee.
The 5-star analyst stated that ARCC is a market-leading BDC with large scale. He believes the company's access to the Ares global lending platform is one of its biggest competitive advantages. Lee is confident that Ares Capital has the potential to deliver above-average return on equity.
Lee considers Ares Capital's experienced leadership team to be one of his key strengths. He also noted that ARCC's dividends are supported by the company's core earnings per share generation and potential net realized gains.
Lee ranks No. 59 among more than 10,000 analysts tracked by TipRanks. Its valuations were profitable 72% of the time and delivered an average return of 16.7%. See Ares Capital ownership structure on TipRanks.
ONE gas
Finally, let's look at ONE gas (OGS), a 100% regulated natural gas utility that delivers affordable energy to over 2.3 million customers in Kansas, Oklahoma and Texas. With a quarterly dividend of 67 cents per share (annualized dividend of $2.68 per share), OGS stock offers a dividend yield of 3.3%.
Recently, Mizuho analyst Gabe Moreen upgraded OGS stock from Hold to Buy and increased his price forecast from $77 to $86. He cited several reasons for this, including the benefits of Texas' HB 4384 legislation (allowing for reimbursement of certain costs associated with putting a gas utility's plant, equipment or equipment into operation) and lower interest rates. Meanwhile, AI analyst at TipRanks has a “neutral” rating on OGS stock with a price target of $81.
Moreen sees the possibility that HB 4384 will generate a full-year benefit of approximately 18 cents in additional EPS in fiscal year 2026. He added that this benefit is not a one-time benefit and will grow with ONE Gas' annual investments in Texas. It's worth noting that Texas accounts for approximately 32% of OGS's rate base. “We believe this will lower OGS’s growth prospects to the higher end of 4-6%,” Moreen said.
The top-rated analyst noted that elevated short-term interest rates were one of the reasons that forced OGS to revise its 2023 and 2024 forecast. He expects the Federal Reserve's interest rate cuts to benefit the company by reducing relative interest expense from prior periods.
Additionally, Moreen highlighted notable growth opportunities for OGS thanks to growing natural gas demand from data centers and advanced manufacturers. He believes all of these catalysts, along with a growing customer base and a solid balance sheet, make OGS stock an attractive choice at current valuation. In fact, Moreen expects OGS to return to its historic premium valuation level at which the stock was trading before the company adjusted its 2023 and 2024 guidance.
Moreen is ranked #142 among more than 10,000 analysts tracked by TipRanks. His reviews were successful 75% of the time and delivered an average return of 13.3%. See ONE Gas technical analysis on TipRanks.