Wall Street’s top analysts are bullish on these dividend stocks

When markets are in turmoil, investors can turn to dividend stocks that can provide income and help cushion their portfolios during tough times.

With a huge number of dividend paying companies, choosing the right stocks can be a tough task, and for that, investors can benefit by following the recommendations of Wall Street experts who thoroughly analyze a company’s earnings growth potential and dividend history.

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

The first dividend stock of the week is a tech giant IBM IBM reported mixed results for the first quarter, with the company’s profits beating expectations but revenue falling short of expectations amid an uncertain macro environment. IBM also announced it would acquire cloud software maker HashiCorp for $6.4 billion.

IBM paid a dividend of $1.5 billion in the first quarter. The company expects to generate $1.9 billion in free cash flow in the first quarter of 2024 and about $12 billion for the full year. IBM’s dividend yield is about 4%.

Evercore analyst Amit Daryanani recently reiterated his buy recommendation on IBM shares with a price target of $215. The analyst is positive on the company’s growth drivers and expects the company to benefit from several tailwinds, including generative artificial intelligence and accelerating consulting revenues.

“IBM expressed confidence that consulting revenue will accelerate in the second quarter from 2 percent growth in the first quarter,” Daryanani said.

While the consulting business was impacted by macro challenges to discretionary spending in the first quarter of 2024, the analyst noted a number of catalysts that point to increased growth going forward. These catalysts include the adoption of generative AI, backlog transformation, and M&A contributions in the second half of 2024 from previously announced transactions. Daryanani is also optimistic about perpetual growth for the mainframe business.

Daryanani is ranked 243rd out of more than 8,800 analysts tracked by TipRanks. His ratings have produced profits 59% of the time, with an average return of 13.2%. (See IBM stock buyback on TipRanks)

Changed jobs to a toy manufacturer Hasbro (HAS). In April, the company reported better-than-expected first-quarter profits thanks to turnaround efforts. Hasbro paid a dividend of $97.2 million in the first quarter of 2024. HAS’s dividend yield is 4.7%.

After speaking with Hasbro management at JPMorgan’s 52nd annual TMC conference, JPM analyst Christopher Horvers upgraded HAS shares to a buy from a hold and increased his price target to $74 from $61.

The analyst said his forecast for Hasbro is higher than the consensus estimate because the market is underpricing the company’s cost-efficiency efforts and the outlook for digital gaming, the benefits of which should be felt in the second half of 2024 and the first half of 2025.

Despite the shortened holiday season, Horvers is optimistic that industry growth will improve in 2024 due to a recovery in lower-priced and product categories with shorter replacement cycles.

“HAS is particularly well positioned for 2H24 given Transformers’ transition from Q2 to Q3 and early benefits from merchandising improvements (new management and process improvements),” the analysts said.

Horvers is ranked 769th out of more than 8,800 analysts tracked by TipRanks, and his ratings are successful 60% of the time, generating an average return of 7.2%. (See Hasbro technical analysis on TipRanks)

Finally, let’s look at big box stores. the goal (TGT). In the first quarter of 2024, Target paid out $508 million in dividends to shareholders. TGT’s dividend yield is 2.8%.

Commenting on Target’s first-quarter results, Baird analyst Peter Benedict noted that the company’s earnings per share fell slightly below analyst expectations as higher operating expenses offset higher gross profit.

Benedict believes the post-earnings sell-off in TGT shares due to lower-than-expected earnings and the company’s announced price cuts is overdone. He argues that further investments in value and affordability through lower prices were always part of Target’s 2024 strategy. The analyst added that the company’s inventory remains in good condition.

In particular, Benedict believes management’s goal of returning to positive same-store sales growth is within reach in the second quarter, as year-over-year comparisons become easier.

The analyst also believes the company “continues to plan cautiously given the value-driven spending environment.”

Overall, Benedict believes the risk/reward profile of TGT stock is attractive. The analyst reiterated his buy recommendation and $190 price target.

Benedict is ranked 77th out of more than 8,800 analysts tracked by TipRanks. His ratings have produced profits 68% of the time, with an average return of 15.1%. (See Target insider trading activity on TipRanks)