The main averages have been on a pointy upward flip since Donald Trump received the presidential election final week, however buyers who wish to buffer their portfolio from future market shocks might wish to add dividend shares.
To choose the fitting dividend shares, buyers can contemplate the suggestions of high Wall Street analysts, who’ve a robust monitor document and supply helpful insights based mostly on a radical evaluation of an organization’s fundamentals.
Here are three dividend-paying stocks, highlighted by Wall Street’s top pros on TipRanks, a platform that ranks analysts based mostly on their previous efficiency.
Enterprise Products Partners
This week’s first dividend decide is Enterprise Products Partners (EPD), a midstream power companies supplier. For the third quarter of 2024, EPD announced a distribution of $0.525 per unit, reflecting a 5% year-over-year improve. EPD presents a excessive yield of 6.9%.
The firm additionally enhances shareholder returns by means of share repurchases. During Q3 2024, EPD made repurchased about $76 million value of its widespread models.
Following EPD’s Q3 outcomes, RBC Capital analyst Elvira Scotto reiterated a purchase score on the inventory with a value goal of $36. The analyst famous that the corporate’s Q3 earnings earlier than curiosity, tax, depreciation and amortization of $2.442 billion was in step with Wall Street and RBC’s estimates, with elevated pure gasoline advertising and marketing contributions offsetting a decline within the margins of the octane enhancement enterprise and crude oil advertising and marketing.
Scotto highlighted EPD’s strong backlog of natural development initiatives, with notable initiatives anticipated to return on-line subsequent yr and gasoline the corporate’s development. The analyst additionally expects the corporate to learn from the not too long ago accomplished acquisition of Pinon Midstream.
“We continue to believe the steady cash flow and EPD’s strong balance sheet (+/- 3.0x financial leverage target) can comfortably handle the spend and drive meaningful long-term growth,” mentioned Scotto.
Scotto ranks No. 20 amongst greater than 9,100 analysts tracked by TipRanks. Her scores have been worthwhile 70% of the time, delivering a mean return of 21.6%. See EPD Stock Buybacks on TipRanks.
International Business Machines
We transfer to the following dividend inventory, IBM (IBM). The tech large not too long ago reported combined outcomes for the third quarter. Earnings exceeded analysts’ estimates, however the high line fell wanting expectations because the strong development in Software revenues was partially offset by decrease Consulting and Infrastructure revenues.
In Q3, IBM generated free money circulate of $2.1 billion and returned $1.5 billion to shareholders by means of dividends. IBM inventory presents a dividend yield of three.1%.
Following investor conferences with IBM administration, Evercore analyst Amit Daryanani reaffirmed a purchase score on IBM inventory with a value goal of $240. The analyst said that after the conferences, he has a “more constructive view of the durability of the company’s long-term growth and their critical role as an enabler of hybrid IT + AI technologies.”
Commenting on IBM’s Enterprise synthetic intelligence positioning, Daryanani thinks that IBM is able to addressing the AI alternative in each its Software and Consulting companies. He highlighted that IBM’s AI ebook of enterprise has elevated to greater than $3 billion, up from $1 billion 1 / 4 in the past, with about 80% of the bookings coming from the Consulting enterprise.
Daryanani famous the energy in IBM’s Software enterprise and expects this momentum to proceed, pushed by persistent development in Red Hat (acquired in 2019), transaction processing development, demand for AI/knowledge options, and mergers and acquisitions. Further, the analyst expects the Consulting enterprise to recuperate subsequent yr.
Overall, Daryanani is assured about IBM’s prospects below the management of CEO Arvind Krishna. He is optimistic concerning the firm’s capacity to develop its revenue at a better fee than income, because of the rising Software combine, working scale and price optimization efforts.
Daryanani ranks No. 316 amongst greater than 9,100 analysts tracked by TipRanks. His scores have been profitable 58% of the time, delivering a mean return of 12.3%. See IBM Hedge Fund Activity on TipRanks.
Ares Capital
Finally, let’s take a look at Ares Capital (ARCC), a specialty finance firm that gives financing options to non-public middle-market firms. ARCC not too long ago reported strong third-quarter outcomes, attributing them to sturdy new funding exercise and wholesome credit score efficiency.
Also, Ares Capital announced a dividend of 48 cents per share for the fourth quarter, payable on Dec. 30. ARCC inventory presents a dividend yield of 8.9%.
Following the Q3 print, RBC Capital analyst Kenneth Lee reaffirmed a purchase score on the inventory and barely raised the value goal to $23 from $22. The analyst’s bullish stance is backed by ARCC’s “strong track record of managing risks through the cycle, well-supported dividends, and scale advantages.”
Lee lowered his adjusted EPS estimates for 2024 to $2.36 from $2.39, and he trimmed them for 2025 to $2.13 per share from $2.17 per share to account for lowered yield assumptions and adjustments in dividend revenue assumptions. Nonetheless, he’s optimistic concerning the firm’s potential attributable to its strong credit score efficiency and fewer draw back threat owing to a positive macro backdrop.
Lee highlighted that ARCC’s portfolio exercise was better than anticipated, with Q3 witnessing internet additions of greater than $1.32 billion, a lot better than RBC’s estimate of over $800 million. He additionally famous the corporate’s improved credit score efficiency, with non-accruals shifting right down to 1.3% in Q3 from 1.5% within the second quarter.
Overall, Lee thinks that ARCC has the potential to ship above peer-average return on fairness and views its scale as a aggressive benefit.
Lee ranks No. 34 amongst greater than 9,100 analysts tracked by TipRanks. His scores have been worthwhile 70% of the time, delivering a mean return of 17.2%. See ARCC Stock Charts on TipRanks.
