Top Wall Street analysts pick these three dividend stocks for higher returns

Macroeconomic woes and geopolitical tensions weighed on investor sentiment, rocking major stock indexes last week.

Investors looking for stability want to turn to dividend stocks.

They can follow the advice of Wall Street analysts who conduct a thorough analysis of the financial health of dividend-paying companies and assess their ability to increase dividends over the long term.

Here are three interesting dividend stocks according to top Wall Street experts TipRanks is a platform that ranks analysts based on their past performance.

Enterprise Product Partner

First dividend stocks of the week Enterprise Product Partner (Environmental Protection Agency), a midstream energy service provider. The limited partnership has increased its cash distribution for 25 consecutive years, with a compound annual growth rate of 7%.

On April 5, Enterprise Products announced a quarterly cash distribution of $0.515, paid on May 14. This payout increased by 5.1% year over year. EPD stock is offering an attractive dividend yield of 7.1%.

Following the company’s investor update call earlier this month, RBC Capital analysts reiterate a buy rating on Elvira Scotto EPD stock with a price target of $35. The analyst said the call supports his view that the company is well positioned to benefit from its organic growth projects, which are expected to come online in 2026.

Scotto added that the company’s organic projects (such as the Mentonsi 2 Delaware natural gas processing plant) are concentrated in the Permian Basin, an area that is expected to grow for at least another decade.

Analysts are confident in EPA’s ability to support growth investments given its strong operating fundamentals and balance sheet. Additionally, he expects the company’s distribution to grow in the mid-single digits.

“EPA is willing to return 55-60% of adjusted CFO (cash flow from operations) to investors through distributions and buybacks,” Scotto said.

Scotto is ranked No. 84 out of more than 8,700 analysts tracked by TipRanks. His ratings were profitable 64% of the time, with an average return of 17.8% per rating. (See Environmental Protection Agency Technical Analysis Quick Rankings)

Goldman Sachs

let’s go Goldman Sachs (GS), one of the leading US investment banks, recently reported better-than-expected results First quarter results, driven by growth in trading and investment banking revenues. A rebound in capital market activity helped it deliver solid results.

Goldman Sachs returned capital of US$2.43 billion to shareholders in the first quarter through $1.5 billion worth of stock repurchases and $929 million in dividends. The bank declared a dividend of $2.75 per share payable on June 27. GS stock’s dividend yield is 2.7%.

Argus analysts react to impressive first-quarter results Stephen Bigger He raised Goldman Sachs’ rating from “hold” to “buy” with a target price of $465, and said the results “demonstrate the extraordinary strength of Goldman Sachs’ business at a time of change in investment banking.”

Despite some spurious rebounds in the investment banking space in 2023, analysts believe that the current recovery looks sustainable. His optimism was supported by encouraging gradual improvements in equity and loan underwriting. He was further encouraged by the double-digit year-over-year increase in the value of M&A deals announced across the industry in the first quarter.

Bigger expects these factors to drive improved revenue in the second half of 2024. He highlighted data from the Securities Industry and Financial Markets Association, which showed capital formation growing by triple digits year-on-year in the first quarter of 2024. It is worth noting that the volume of IPO issues increased by 239% in the first quarter and the volume of secondary issues increased by 110%.

Bigger is ranked No. 603 out of more than 8,700 analysts tracked by TipRanks. His rating was profitable 60% of the time, with an average return of 11.8% each time. (See Goldman Sachs Stock Buybacks Quick Ranking)

Cisco Systems

Finally let’s take a look Cisco Systems (China Association for Science and Technology), a network equipment manufacturer. In the second quarter of fiscal 2024, the company returned a total of $2.8 billion to shareholders through stock repurchases and a dividend of 39 cents per share.

Cisco announced that it will increase its dividend by about 3% to 40 cents per share, with payments beginning in April 2024. The stock has a dividend yield of 3.3%.

On April 15, Bank of America Securities analyst Dr. Tal Liani upgraded Cisco Systems stock to buy from hold and raised the price target from $55 to $60, citing valuations and three catalysts: AI-related tailwinds, security business growth and artificial intelligence synergies. The recently completed Splunk acquisition.

“We expect the network to begin to normalize and achieve new growth driven by the increasing share of Cisco’s Ethernet-based AI builds for hyperscale enterprises,” Liani said.

While the analyst agrees that pressure may continue in the next two quarters, he believes this downward trend is fully reflected in Wall Street expectations. He believes management’s guidelines are conservative enough.

At the same time, stability in the firewall space and the growth of the company’s security business driven by recently launched products is expected to accelerate.

Liani is ranked No. 532 out of more than 8,700 analysts tracked by TipRanks. His rating success rate is 55%, with an average return per rating of 10.9%. (See Cisco Ownership Structure Quick Rankings)