Top Wall Street Analysts Recommend These Dividend Stocks for Strong Returns

The month of September began unpredictably for investors, with high volatility affecting markets in the first week. However, dividend-paying stocks can offer more stability during such times.

 

Long-term investors can look past short-term fluctuations, focusing on stocks that could enhance overall portfolio returns through a combination of dividends and share price growth.

 

Top recommendations from leading Wall Street analysts can guide investors toward stocks with solid fundamentals and the capability to provide steady dividends.

 

Here are three dividend stocks, recommended by top Wall Street analysts on TipRanks, a platform that rates analysts based on their historical performance.

 

First up is MPLX (MPLX), a midstream energy company. For the second quarter of 2024, MPLX reported a quarterly cash distribution of 85 cents per common unit ($3.40 on an annualized basis), offering an attractive yield of nearly 8%.

 

Recently, RBC Capital analyst Elvira Scotto reiterated her buy rating for MPLX with a price target of $47, citing strong second-quarter results with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) exceeding Wall Street's estimates by 3%.

 

Scotto has raised her adjusted EBITDA estimates for 2024 and 2025, reflecting robust performance in the Logistics & Storage segment and some joint venture consolidation. She maintains her distribution per unit estimates of $3.57 for 2024 and $3.84 for 2025.

 

Scotto regards MPLX as "one of the most attractive income plays among large-cap MLPs," primarily due to its strong yield and growing free cash flow. She believes MPLX’s healthy free cash flow will facilitate business growth and improve shareholder returns through buybacks.

 

Scotto also highlighted MPLX's ongoing expansion of natural gas and natural gas liquids assets through organic projects, joint ventures, and bolt-on acquisitions.

 

Ranked 18th among more than 9,000 analysts tracked by TipRanks, Scotto’s ratings have been successful 69% of the time, yielding an average return of 20.8%.

 

Next is Chord Energy (CHRD), an independent oil and gas company operating in the Williston Basin. It recently issued a base dividend of $1.25 per share and a variable dividend of $1.27 per share.

 

On Sept. 4, RBC Capital analyst Scott Hanold reaffirmed his buy rating for CHRD, setting a price target of $200. Hanold increased his earnings per share and cash flow per share estimates for 2024 and 2025 by nearly 3%, thanks to slightly higher production and lower cash operating costs.

 

Hanold expects free cash flow of $1.2 billion and $1.4 billion in 2024 and 2025, respectively. He anticipates an increase in free cash flow in the latter half of 2024 due to Chord Energy’s integration with Enerplus, acquired earlier this year.

 

Hanold is optimistic about the potential synergies from the Enerplus integration, stating, "We remain optimistic the company will not just meet but potentially exceed the synergy targets as operations are fully integrated."

 

The analyst projects a quarterly distribution of $4.50 to $5.00 per share in the second half of 2024, with dividends constituting about 60% of distributions and buybacks making up 40%.

 

Ranked 27th among more than 9,000 analysts tracked by TipRanks, Hanold’s ratings have succeeded 63% of the time, producing an average return of 25.4%.

 

The third pick for this week is fast-food giant McDonald's (MCD), which offers a dividend yield of 2.3%. McDonald's is a dividend aristocrat, having raised its dividends for 47 consecutive years.

 

On Sept. 3, Tigress Financial analyst Ivan Feinseth reiterated his buy rating for McDonald’s, increasing his price target to $360 from $355. Despite a challenging environment, Feinseth remains bullish on McDonald's due to its continuous technological innovations, strategic initiatives, and focus on value.

 

Feinseth highlighted McDonald’s commitment to enhancing its value offerings, such as the new $5 meal deal, which boosts its image as an affordable fast-food chain.

 

Additionally, Feinseth pointed to McDonald’s competitive advantages, including strong brand equity, a robust loyalty program with 166 million members, and digital initiatives. The company aims to grow its active loyalty membership to 250 million by 2027.

 

The analyst also noted McDonald's capital investments of $2 billion to $2.5 billion annually for store expansion and technology improvements, including automated voice AI for ordering. Feinseth is confident in McDonald’s long-term growth potential and its ability to enhance shareholder returns through dividends and share repurchases, expecting an announcement of a dividend hike in October similar to the 10% increase from last year.

 

Feinseth is ranked 210th among over 9,000 analysts tracked by TipRanks, with his ratings being profitable 60% of the time, delivering an average return of 11.9%.