Investors looking for a reliable stream of income often turn to dividend stocks as a way to enhance their portfolios. With a multitude of dividend-paying companies in the market, it can be challenging for investors to sift through all the options and select the best stocks. This is where insights from top analysts can be invaluable. Here are three top dividend stock picks recommended by Wall Street’s leading experts on TipRanks, a platform that evaluates analysts based on their past performance.
Energy Transfer (ET), a master limited partnership (MLP), is the first dividend stock on our list this week. The midstream energy company boasts an extensive network of over 125,000 miles of pipeline and related energy infrastructure. Energy Transfer recently announced a quarterly cash distribution of $0.3150 per common unit for Q4 2023, marking a 3.3% increase year-over-year. With an annualized distribution per unit of $1.26, ET stock offers an attractive yield of 8.4%.
Stifel analyst Selman Akyol, ranked 396th among over 8,700 analysts tracked by TipRanks, reiterated a buy rating on ET stock with a price target of $18 per share following the company’s fourth-quarter results. Akyol highlighted that the company’s earnings before interest, taxes, depreciation, and amortization for Q4 2023 surpassed Wall Street’s estimates. Energy Transfer’s management also provided guidance of 2024 adjusted EBITDA between $14.5 billion and $14.8 billion.
Akyol emphasized that ET is operating at the lower end of its leverage range and could further reduce its debt to maintain “dry powder” for potential mergers and acquisitions. The recent Crestwood acquisition is expected to generate annual synergies of $80 million by 2026, with $65 million anticipated in 2024. With strong expectations for free cash flow generation in 2024, Akyol believes Energy Transfer has ample room for incremental growth projects or unit buybacks.
Another dividend stock that has caught the attention of Wall Street analysts is Garmin (GRMN), a navigation device maker known for delivering better-than-expected fourth-quarter earnings and solid guidance. The company announced a quarterly dividend of 73 cents per share, with plans to propose a dividend increase to 75 cents per share at the upcoming annual shareholders meeting in June. In addition, Garmin unveiled a new share repurchase program of up to $300 million through December 2026.
Tigress Financial analyst Ivan Feinseth, ranked 233rd among TipRanks’ analyzed analysts, reiterated a buy rating on GRMN stock and raised the price target to $175 from $165. Feinseth highlighted Garmin’s revenue growth in Q4 2023 and for the full year, attributing it to strong demand for its advanced smart wearables and new product launches. The analyst praised Garmin’s strong balance sheet and cash flow position, enabling the company to invest in product development, strategic acquisitions, and increased shareholder returns.
Feinseth further pointed out that Garmin is focusing on automotive product development, strengthening OEM partnerships, and launching new automotive specialty products to capitalize on growth opportunities across its key markets. With diversified product lines and industry-leading offerings in Aviation, Automotive, Fitness, Marine, and Outdoor pursuits, Garmin is positioned to benefit from emerging trends and market opportunities.
Target Corporation (TGT) rounds out our list of top dividend stock picks for this week. Despite facing macroeconomic pressures, Target delivered better-than-expected revenue and earnings in the fourth quarter, underscored by improvements in inventory management and operational efficiency. The retailer’s quarterly dividend of $1.10 per share represents a 1.9% year-over-year increase and offers a dividend yield of 2.6%. Target has a remarkable track record of increasing dividends for 52 consecutive years.
Jefferies analyst Corey Tarlowe, ranked 399th among TipRanks’ analyzed analysts, reiterated a buy rating on TGT stock and boosted the price target to $195 from $170 in light of the retailer’s robust Q4 results. Tarlowe noted that Target’s revenue growth in the fourth quarter was driven by a 10% increase in other revenue, supported by strong advertising growth. The analyst expects further revenue gains as Target expands its advertising business.
Tarlowe expressed optimism about Target’s long-term prospects, citing the company’s progress in inventory management, shrink reduction, and operational efficiencies. The analyst highlighted Target’s clean inventory position and the potential for margin recapture opportunities as the company continues to navigate temporary margin headwinds.
These three dividend stocks recommended by Wall Street’s top analysts offer investors attractive opportunities for income generation and long-term growth potential. Consider incorporating these picks into your investment portfolio for a diversified and reliable source of returns in the market.
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