Dividend-paying stocks can boost returns in investors’ portfolios and provide certainty in volatile markets.
Investors can track Wall Street analyst ratings to choose stocks in dividend-paying companies with attractive growth prospects that could lead to rising earnings and cash flows that can support higher dividends.
Here are three dividend stocks that look attractive, according to top Wall Street experts at TipRanks, a platform that ranks stocks based on analysts’ past performance.
Northern Oil and Gas
The first dividend stock of the week Northern Oil and Gas (NOG) is engaged in the acquisition, exploration and production of oil and natural gas assets primarily in the Williston, Permian and Appalachian basins.
NOG paid a dividend of 40 cents per share in the first quarter, up 18% from a year ago. The stock has a dividend yield of 4.1%. The company also boosted shareholder returns through share repurchases worth $20 million in the first quarter of 2024.
NOG recently announced it has signed an agreement to acquire a 20% undivided stake in XCL Resources’ Uinta Basin assets for $510 million, with the transaction being conducted in partnership with SM Energy.
Responding to the news, RBC Capital analyst Scott Hanold reiterated his buy recommendation on NOG shares with a target price of $46. After discussions with management, the analyst noted that there is potential for further expansion in the Uinta Basin through add-on transactions, similar to NOG’s strategy in the Permian and Williston Basins.
Hanold said the deal was in line with NOG’s strategy of working with quality operators such as SM Energy to seize profitable opportunities. “This is NOG’s fourth large JV. [joint venture] And it will contribute meaningfully to diversity, revenue and inventory runway,” he said.
The analyst raised his 2025 earnings per share and cash flow per share forecasts by 11-12%, and his free cash flow per share forecast by 10%, given that the XCL deal will provide significant revenue accretion. The analyst believes the strong free cash flow outlook will allow NOG to increase its base dividend. Hanold predicts the dividend will grow by 10-15% in 2025.
Hannold is ranked 23rd out of more than 8,900 analysts tracked by TipRanks, and his ratings have produced profits 67% of the time, with an average return of 26.7%. (See NOG stock buyback on TipRanks)
JPMorgan Chase
JPMorgan Chase JPM, the largest U.S. bank by assets, is the next dividend candidate. Last month, the bank announced plans to increase its dividend by about 9% to $1.25 a share in the third quarter of 2024. JPM’s dividend yields 2.2%.
JPM highlighted that the potential increase in its third-quarter dividend would be its second increase this year. In March 2024, the bank announced it would increase its dividend to $1.15 per share from $1.05. Additionally, JPM’s board of directors authorized a new $30 billion share repurchase program starting July 1 to boost shareholder returns.
Recently, RBC Capital analyst Gerald Cassidy reaffirmed his buy recommendation on JPM shares, with a price target of $211. The analyst cited several reasons for his bullish investment thesis, including strong management, JPM’s excellent business line, which ranks among the top three banks in the industry, and a solid balance sheet.
“We believe that as the company builds economies of scale in its consumer and capital markets businesses, it will be able to take market share from weaker competitors and realize improved profitability,” Cassidy said.
The analyst also highlighted JPM’s diversified business model, which derives revenue from consumer and community banking (41% of first-quarter 2024 revenue), corporate and investment banking (32%), asset and wealth management (12%), commercial banking (9%) and corporate (5%).
Cassidy is ranked 128th out of more than 8,900 analysts tracked by TipRanks, and his ratings have been successful 63% of the time, delivering an average return of 14.7%. (See JPM stock chart on TipRanks)
Walmart
Finally, let’s look at big box stores. Walmart (WMT). Earlier this year, the company increased its dividend by 9% to 83 cents a share, marking Walmart’s 51st consecutive year of increases.
WMT returned $2.73 billion to shareholders in the first quarter through dividends of $1.67 billion and share repurchases of $1.06 billion. With a dividend payout ratio of 37.5%, the company sees potential for further dividend increases.
Recently, Jefferies analyst Corey Tarlow reiterated his buy recommendation on Walmart shares with a $77 price target and called the stock his top pick in the company. The analyst believes Walmart is in the early stages of its artificial intelligence and automation efforts.
Tarlow believes AI and automation could double the company’s operating profit and increase earnings before interest and taxes by more than $20 billion by fiscal 2029 compared to fiscal 2023. The analyst expects the increase in operating profit to be driven by several factors, including automation efficiencies, advertising, theft prevention and self-driving cars.
Among recent AI developments, the analyst highlighted WMT’s strategic investment and partnership with Fox Robotics, which offers the world’s first autonomous forklift, and also noted the introduction of automated receipt verification arches at Sam’s Club as part of the company’s AI strategy.
“Overall, we expect WMT to strengthen its omnichannel capabilities, partnerships and services to capture an increasingly larger share of customer spend,” Tarlow said.
Tarlow is ranked 266th out of more than 8,900 analysts tracked by TipRanks. His ratings are successful 67% of the time, generating an average return of 19.7%. (See WMT technical analysis on TipRanks)
