Top Wall Street analysts recommend these 3 dividend stocks

Investors searching for a regular stream of income can give their portfolios a boost by adding attractive dividend stocks.

Given the large universe of dividend-paying companies, it can be difficult for investors to conduct an in-depth analysis and pick the right stocks. To this end, insight from the top analysts can help inform investors’ decisions.

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

Energy Transfer

This week’s first dividend stock is Energy Transfer (ET), a master limited partnership or MLP. The midstream energy company operates more than 125,000 miles of pipeline and related energy infrastructure.

Earlier this year, Energy Transfer announced a quarterly cash distribution of $0.3150 per common unit for Q4 2023, reflecting a year-over-year increase of 3.3%. With an annualized distribution per unit of $1.26, ET stock offers an attractive yield of 8.4%.

Following the company’s fourth-quarter results, Stifel analyst Selman Akyol reiterated a buy rating on ET stock with a price target of $18 per share. The analyst noted that the Q4 2023 earnings before interest, taxes, depreciation and amortization surpassed Wall Street’s estimates, with the company guiding 2024 adjusted EBITDA between $14.5 billion and $14.8 billion.

Akyol highlighted that ET is operating at the lower end of its leverage range, with the management commenting that the company could continue to reduce its debt further to maintain some “dry powder” (or cash reserves), which would enable it to pursue additional M&A deals. Coming to the Crestwood acquisition, management expects annual synergies of $80 million by 2026, with $65 million expected in 2024. 

Management also intends to consider growing its distribution and conducting opportunistic buybacks. “We believe ET will generate well over $1 billion of FCF [free cash flow] after distribution in 2024, which could be geared towards incremental growth projects or potential unit buybacks,” said Akyol.

Akyol ranks No. 396 among more than 8,700 analysts tracked by TipRanks. His ratings have been successful 67% of the time, with each generating an average return of 6.9%. (See Energy Transfer Stock Charts on TipRanks)

Garmin

We move to the navigation device maker Garmin (GRMN). The company impressed investors by delivering better-than-anticipated fourth-quarter earnings and solid guidance, thanks to the strength in its auto and fitness businesses.

Garmin announced a quarterly dividend of 73 cents per share, payable on March 29. Further, it will propose a dividend hike of 2.7% to 75 cents per share at the upcoming annual shareholders meeting in June. The company also announced a new share repurchase program of up to $300 million through December 2026. GRMN stock offers a dividend yield of 2.1%.

Tigress Financial analyst Ivan Feinseth recently reiterated a buy rating on GRMN stock and raised the price target to $175 from $165. The analyst noted that the company’s Q4 2023 and full-year revenue gained from solid demand for its advanced smart wearables, several new launches, and momentum in the auto OEM (original equipment manufacturer) business.

Feinseth highlighted that the company’s strong balance sheet and cash flow enable it to invest in new product development, make strategic acquisitions and increase shareholder returns. The analyst added that the company is boosting its investment in automotive product development, focusing on OEM partnerships with prominent auto players and rolling out new automotive specialty products.

“GRMN’s diversified product lines and industry-leading products position it to benefit from new opportunities in all its key markets, including Aviation, Automotive, Fitness, Marine, and Outdoor pursuits,” he said.

Feinseth ranks No. 233 among more than 8,700 analysts tracked by TipRanks. His ratings have been successful 61% of the time, with each generating an average return of 12.1%. (See Garmin Insider Trading Activity on TipRanks)

Target

This week’s third dividend pick is Target (TGT), which delivered better-than-expected fourth-quarter revenue and earnings, even as macro pressures continue to weigh on the retailer’s business. Given a tough macroeconomic backdrop, the company is focused on improving its profitability through better inventory management and increased efficiency in its operations.

Target’s quarterly dividend of $1.10 per share reflects a 1.9% year-over-year increase and represents a dividend yield of 2.6%. Target has increased its dividends for 52 consecutive years.   

Impressed by the Q4 results, Jefferies analyst Corey Tarlowe reiterated a buy rating on TGT stock and boosted the price target to $195 from $170. Tarlowe noted that the retailer’s Q4 revenue benefited from a 10% rise in other revenue, thanks to solid growth in advertising. The analyst expects further gains, as Target is ramping up its advertising business.

The analyst stated that while Target slightly surpassed Q4 revenue expectations, investors were more impressed with the company’s operating margin beat of nearly 100 basis points. The analyst is encouraged by the improvement that Target has shown in its inventory management, shrink reduction, and in-store and supply chain efficiencies.   

Tarlowe remains bullish on Target’s long-term opportunity and concluded, “TGT has a clean inventory position and is continuing to lap temporary margin headwinds, which could result in margin recapture opportunities.”

Tarlowe holds the 399th position among more than 8,700 analysts tracked by TipRanks. His ratings have been successful 67% of the time, with each generating an average return of 17%. (See Target Ownership Structure on TipRanks)