September had a turbulent start for investors, with market volatility shaking things up in the first week. However, dividend-paying stocks can serve as a stabilizing force, helping to smooth out the ride for investors.
For those with a long-term investment horizon, it’s important to look past the short-term noise and focus on stocks that have the potential to enhance total portfolio returns through a combination of dividends and share price appreciation. One way to identify such stocks is by following the recommendations of top Wall Street analysts.
On that note, here are three dividend stocks that have been highlighted by Wall Street’s top pros on TipRanks, a platform that ranks analysts based on their past performance.
MPLX LP
We kick off with MPLX, a midstream energy player that offers a quarterly cash distribution of 85 cents per common unit ($3.40 annualized) for the second quarter of 2024. With an attractive yield of nearly 8%, this stock has caught the attention of investors.
RBC Capital analyst Elvira Scotto recently reiterated a buy rating on MPLX stock, setting a price target of $47. Scotto updated her model to reflect the company’s strong second-quarter results, which saw adjusted earnings before interest, taxes, depreciation, and amortization beating the Street’s estimate by 3%.
Scotto raised her adjusted EBITDA estimates for 2024 and 2025 to account for the solid performance of the Logistics & Storage segment in Q2 and some consolidation of joint venture interests. She maintained her distribution per unit estimate of $3.57 for 2024 and $3.84 for 2025.
Seeing MPLX as one of the most attractive income plays among large-cap MLPs, Scotto emphasizes the company’s robust yield and rising free cash flow generation. She believes that MPLX’s strong free cash flow will support growth and enhance shareholder returns through buybacks.
Scotto also highlighted MPLX’s expansion in natural gas and natural gas liquids assets across its integrated network via organic projects, joint venture interests, and bolt-on acquisitions.
Scotto is ranked No. 18 among over 9,000 analysts tracked by TipRanks, with profitable ratings 69% of the time and an average return of 20.8%. (See MPLX Options Trading on TipRanks)
Chord Energy
Next up is Chord Energy, an independent oil and gas company operating in the Williston Basin. The company’s recent dividend payouts highlight its commitment to rewarding shareholders.
RBC Capital analyst Scott Hanold reaffirmed a buy rating on CHRD stock, with a price target of $200. Hanold increased his earnings per share and cash flow per share estimates for 2024 and 2025 to reflect higher production and lower cash operating costs.
Hanold expects strong free cash flow of $1.2 billion and $1.4 billion in 2024 and 2025, respectively. He anticipates an increase in FCF in the second half of 2024 as a result of the integration of Chord Energy and Enerplus, which the company acquired earlier in the year.
With optimistic views on the Enerplus integration, Hanold anticipates a quarterly distribution of $4.50 to $5.00 per share in the second half of 2024, with dividends accounting for 60% of the distributions and buybacks making up the remaining 40%.
Hanold is ranked No. 27 among more than 9,000 analysts tracked by TipRanks, with profitable ratings 63% of the time and an average return of 25.4%. (See Chord Energy Stock Buybacks on TipRanks)
McDonald’s
Our final pick for the week is fast-food giant McDonald’s, a dividend aristocrat with a dividend yield of 2.3%. Known for its consistent dividend increases over the years, McDonald’s continues to attract income-seeking investors.
Tigress Financial analyst Ivan Feinseth reiterated a buy rating on MCD stock, raising his price target to $360. Despite facing challenges, Feinseth remains bullish on McDonald’s due to its technology initiatives, innovation, and focus on value offerings.
Feinseth highlighted McDonald’s efforts to enhance its value offerings and regain its competitive edge, with recent value deals like the $5 meal deal. These initiatives have positioned McDonald’s as a fast-food chain that offers both value and affordability.
With a solid brand equity, loyalty program, and digital initiatives, McDonald’s has a competitive advantage that supports its long-term growth potential. Feinseth noted that the company aims to reach 250 million active loyalty members by 2027, up from the current 166 million.
Investing between $2 billion and $2.5 billion annually in store expansion and technology improvements, McDonald’s is focused on enhancing its ordering capabilities through automated voice AI. Feinseth expects McDonald’s to announce a dividend hike in October, similar to the 10% rise seen last year.
Feinseth is ranked No. 210 among more than 9,000 analysts tracked by TipRanks, with profitable ratings 60% of the time and an average return of 11.9%. (See McDonald’s Insider Trading Activity on TipRanks)
Conclusion:
In conclusion, dividend-paying stocks can be a valuable addition to an investor’s portfolio, providing a steady income stream and potentially higher total returns. By following the recommendations of top Wall Street analysts, investors can identify high-quality dividend stocks with strong fundamentals and growth potential.
Stocks like MPLX, Chord Energy, and McDonald’s offer attractive dividend yields and a history of consistent payouts, making them appealing choices for income-seeking investors. These stocks have been highlighted by top analysts for their solid performance and growth prospects.
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