Top Wall Street analysts expect these dividend stocks to enhance total returns

With the late 2023 rally underway, traders can bolster their portfolios by including a choose group of dividend payers into the combination.

Dividend-paying shares give traders a mix of potential value appreciation and earnings, which may improve whole returns.

Bearing that in thoughts, listed here are 5 enticing dividend shares, in response to Wall Road’s prime consultants on TipRanks, a platform that ranks analysts based mostly on their previous efficiency.

First on this week’s checklist is Vitality Switch (ET), a restricted partnership that operates a diversified portfolio of vitality property within the U.S., with practically 125,000 miles of pipelines. ET just lately accomplished its acquisition of Crestwood Fairness Companions.

In October, ET declared a quarterly money distribution of $0.3125 per frequent unit for the third quarter, which was paid on Nov. 20. The inventory has a dividend yield of 9%.

Commenting on the third-quarter outcomes, RBC Capital analyst Elvira Scotto mentioned that Vitality Switch delivered a stable efficiency, with adjusted earnings earlier than curiosity, taxes, depreciation and amortization exceeding the consensus estimate by 7%. The analyst additionally famous the rise within the 2023 midpoint adjusted EBITDA outlook by $300 million.

Scotto expects the Crestwood acquisition to supply industrial synergies. Additional, she identified that ET intends to take care of a powerful stability sheet, aiming for leverage of 4.0-4.5x debt/EBITDA. Additionally, ET goals to proceed to return money to unitholders by way of elevated distribution and potential buybacks.  

“With excessive return development initiatives, accretive acquisitions and its built-in asset footprint throughout hydrocarbons and basins, we consider ET can generate important money stream within the coming years,” mentioned Scotto.

Scotto elevated her value goal on Vitality Switch to $19 from $18 and reiterated a purchase score, calling the inventory a compelling funding alternative. She ranks No. 54 amongst greater than 8,700 analysts tracked by TipRanks. Her scores have been worthwhile 65% of the time, with every delivering a mean return of 18.1%. (See Vitality Switch Insider Buying and selling Exercise on TipRanks) 

Scotto can also be upbeat about one other restricted partnership: Sunoco (SUN), one of many main motor gas distributors within the U.S.

For the third quarter, Sunoco introduced a quarterly money distribution of $0.8420 per unit, paid on Nov. 20. The corporate’s dividend yield stands at 6.3%.

After Sunoco posted its quarterly outcomes, Scotto raised the value goal for SUN inventory to $57 from $51 to replicate a better earnings outlook. The analyst reiterated a purchase score, saying that the corporate’s volumes and margins surpassed her estimates.  

The analyst thinks that the corporate’s scale, procurement means and decrease price construction in comparison with the trade allow it to ship past the trade’s breakeven margin.

“SUN continues to take care of a powerful stability sheet exiting 3Q23 with leverage of three.9x and whole liquidity of $1.1BN, which gives SUN with important monetary flexibility to pursue development alternatives together with acquisitions.”

Total, Scotto stays bullish on Sunoco as a consequence of its stable money flows and concentrate on breakeven margins and expense administration. (See Sunoco Hedge Funds Buying and selling Exercise on TipRanks) 

Our subsequent dividend inventory is VICI Properties (VICI), an actual property funding belief. VICI owns a stable portfolio of gaming, hospitality, and leisure properties, together with the properties of the long-lasting Caesars Palace Las Vegas and MGM Grand.

For the third quarter, the corporate declared a money dividend of $0.415 per share, reflecting a 6.4% improve. VICI presents a dividend yield of 5.4%.

In a latest analysis observe, Stifel analyst Simon Yarmak, who ranks 573rd out of greater than 8,700 analysts tracked by TipRanks, reiterated a purchase score on VICI inventory and known as it one among his prime concepts within the North American triple-net REITs sector.

Yarmak famous that VICI has carried out effectively in each gaming and non-gaming classes. He added that VICI’s tenants stay in a powerful place.

“VICI has negotiated favorable escalators in its leases, which give sturdy inner development. Many of those escalators are linked to uncapped CPI development (50.0% of hire) and, due to this fact, VICI ought to profit from significant lease escalations within the above-average inflationary setting,” famous Yarmak.

The analyst estimates that lease escalations would generate about $71 million of incremental hire in 2024, which was not captured within the 2023 outcomes. He expects VICI to publish among the finest year-over-year development in 2024 within the triple-net sector, with practically 4.5% to five.0% adjusted funds from operations development.

Yarmak’s scores have been profitable 54% of the time, with each delivering a mean return of 8%. (See VICI’s Choices Exercise on TipRanks)

We transfer to house enchancment retailer Residence Depot (HD). The corporate exceeded analysts’ fiscal third-quarter estimates regardless of a decline in gross sales as a consequence of strain in sure big-ticket, discretionary classes. Nonetheless, the corporate narrowed its full-year outlook as a consequence of macro pressures.

For the third quarter, the corporate declared a money dividend of $2.09 per share, payable on Dec. 14. HD’s dividend yield stands at 2.6%.

Following the fiscal third-quarter outcomes, JPMorgan analyst Christopher Horvers lowered the value goal for HD inventory to $318 from $332 however maintained a purchase score, saying that Residence Depot is managing effectively towards a troublesome backdrop.

The analyst thinks that administration’s tone was much less optimistic versus the second quarter however not worse than the primary quarter. Whereas the house enchancment class is predicted to stay below strain within the first half of 2024, comparable gross sales are projected to get better within the second half.

“We consider HD stays top-of-the-line long-term tales in retail given company-specific gross sales and margin initiatives, the duopoly/AMZN-resistant nature of the trade, and important monetary and working leverage that amplifies EPS development in higher gross sales environments,” mentioned Horvers.

Horvers ranks No. 520 amongst greater than 8,700 analysts on TipRanks. His scores have been worthwhile 61% of the time, with every delivering a mean return of 8%. (See Residence Depot’s Technical Evaluation on TipRanks)

We lastly have a look at big-box retailer Walmart (WMT). Earlier this 12 months, the corporate introduced a 2% improve in its annual dividend per share to $2.28. This marked the fiftieth consecutive 12 months of dividend hikes for the corporate, giving Walmart the tag of a dividend king. The inventory presents a dividend yield of 1.5%.

Just lately, the retailer beat analysts’ fiscal third-quarter earnings and gross sales expectations. Nonetheless, it cautioned traders about subdued shopper spending.  

Following the print, Guggenheim analyst Robert Drbul reaffirmed a purchase score on the inventory with a value goal of $180. The analyst famous that Walmart witnessed stable site visitors development throughout bodily shops and digital channels. He elevated his full-year gross sales estimates to replicate upbeat Q3 efficiency however maintained his fiscal 2024 and 2025 adjusted earnings per share estimates as a consequence of further expense pressures. 

“We proceed to consider Walmart is effectively positioned in an unsure macro setting with its value and worth proposition and with elevated comfort and assortment,” mentioned Drbul.   

The analyst added that given the inventory’s 1.5% dividend yield and the truth that it is buying and selling at 22.3 occasions his fiscal 2025 EPS estimate of $7, WMT inventory presents one thing for earnings, worth and development traders.

Drbul holds the 652nd place amongst greater than 8,700 analysts on TipRanks. His scores have been profitable 59% of the time, with every delivering a mean return of 5.9%. (See Walmart’s Monetary Statements on TipRanks).