With the Federal Reserve expected to cut interest rates in September, dividend-paying stocks could be outperformers.
That’s because the dividend yields on these stocks look more attractive compared to the returns offered by other income-generating assets, including bonds.
Given the sheer number of companies that pay dividends, it can be difficult for investors to choose the right stocks. Investors may need to consider the recommendations of top analysts when choosing attractive dividend stocks with good financial standing.
Here are three dividend stocks that are attracting attention from top Wall Street pros on TipRanks, a platform that ranks stocks based on analysts’ past performance.
EPR Properties
The first dividend stock of the week EPR Properties (EPR) is a real estate investment trust that focuses on experiential properties such as movie theaters, amusement parks, restaurants, and ski resorts. EPR has a dividend yield of 7.3%.
RBC Capital analyst Michael Carroll recently upgraded EPR to a buy rating from a hold rating and raised his price target to $50 from $48, saying he thinks the company has weathered a tough business environment that included the coronavirus pandemic and the actors and writers strike.
Carroll believes EPR is positioned to perform well as the aforementioned headwinds abate. “We expect theatrical box office revenue to accelerate again in the second half of 2024 and 2025, leading to higher rent rates and a stronger tenant base,” the analyst said.
Regarding concerns about EPR’s large exposure to theaters, the analyst noted that management intends to reduce this exposure over time, adding that concerns about one of the company’s major tenants, AMC, appear to have been somewhat alleviated as AMC undertakes initiatives such as recapitalization and debt refinancing.
Finally, Carroll emphasized that EPR’s high dividend yield is well protected by an adjusted operating cash flow dividend payout ratio of approximately 70% and a solid balance sheet with a net debt to earnings before interest, taxes, depreciation and amortization ratio of 5.2x.
Carroll is ranked 703 out of more than 9,000 analysts tracked by TipRanks. His ratings generate profits 63% of the time and have delivered an average return of 7.7%. Learn more about EPR Properties’ ownership structure on TipRanks.
Energy Transfer
The next dividend candidate is Energy Transfer (ET) is a limited liability partnership. The midstream energy company paid a quarterly cash dividend of 32 cents per unit on August 19, reflecting year-over-year growth of 3.2%. Energy Transfer’s dividend yield is 8%.
ET following the second-quarter results, Stifel analyst Selman Akyol said the company reported better-than-expected EBITDA and noted several growth opportunities across its value chain, primarily from the Permian to the Gulf Coast.
The outlook for natural gas is optimistic, as it is expected to supply a large portion of the energy needs of artificial intelligence data centers. Akyol stressed that ET’s management believes the company’s solid foundations will enable it to provide the natural gas needed to continuously power data centers.
Akyol noted that ET is also benefiting from increased demand from utilities, particularly in Texas and Florida, two states that offer attractive growth prospects for ET due to their data center potential and robust population growth.
“Energy Transfer is not taking any chances, and while the capital expenditure run rate could increase, we continue to like the company’s positioning,” Akyol said. He reaffirmed his buy recommendation on ET shares with a $19 price target.
Akyol is ranked 137th out of more than 9,000 analysts tracked by TipRanks. His ratings are successful 71% of the time, generating an average return of 10.3%. View Energy Transfer stock chart on TipRanks.
Walmart
Large retail stores Walmart (WMT) recently impressed investors with its strong financial results for the second quarter of fiscal 2025. The company also raised its full-year outlook to reflect strong performance in the first half of the year.
Walmart continues to reward shareholders with dividends and share repurchases. In the first half of fiscal 2025, the company paid out more than $3 billion in dividends and repurchased $2.1 billion worth of stock. Earlier this year, Walmart increased its dividend by 9% to 83 cents per share, marking the company’s 51st consecutive year of dividend increases.
Following the second-quarter report, Baird analyst Peter Benedict reaffirmed his buy recommendation on Walmart shares and raised his price target to $82 from $70, highlighting how the company has gained market share despite macroeconomic uncertainty thanks to its consistent focus on value and convenience.
The analyst said Walmart’s second-quarter performance clearly reflected the effectiveness of the company’s transformation efforts, with “approximately 70% of U.S. companion growth driven by digitalization and more than 50% of overall enterprise growth driven by digitalization.” [earnings before interest and taxes] Growth will come from higher margin advertising/membership revenue streams.”
Benedict also highlighted that Walmart’s return on investment over the past 12 months increased 10 basis points sequentially to 15.1%, an improvement driven by the company’s investments in areas such as automation and generative AI.
Benedict is ranked 35th out of more than 9,000 analysts tracked by TipRanks. His ratings have produced profits 71% of the time, with an average return of 15.9%. See Walmart Share Buybacks on TipRanks.
