The primary averages have been on a sharp upward flip since Donald Trump acquired the presidential election closing week, nevertheless patrons who want to buffer their portfolio from future market shocks may want to add dividend shares.
To select the becoming dividend shares, patrons can ponder the ideas of excessive Wall Street analysts, who’ve a sturdy monitor doc and provide useful insights based mostly totally on a radical analysis of a corporation’s fundamentals.
Here are three dividend-paying stocks, highlighted by Wall Street’s top pros on TipRanks, a platform that ranks analysts based mostly totally on their earlier effectivity.
Enterprise Products Partners
This week’s first dividend resolve is Enterprise Products Partners (EPD), a midstream energy corporations provider. For the third quarter of 2024, EPD announced a distribution of $0.525 per unit, reflecting a 5% year-over-year enhance. EPD presents a extreme yield of 6.9%.
The agency moreover enhances shareholder returns via share repurchases. During Q3 2024, EPD made repurchased about $76 million worth of its widespread fashions.
Following EPD’s Q3 outcomes, RBC Capital analyst Elvira Scotto reiterated a purchase order rating on the stock with a worth objective of $36. The analyst well-known that the company’s Q3 earnings sooner than curiosity, tax, depreciation and amortization of $2.442 billion was in line with Wall Street and RBC’s estimates, with elevated pure gasoline promoting and advertising and marketing contributions offsetting a decline inside the margins of the octane enhancement enterprise and crude oil promoting and advertising and marketing.
Scotto highlighted EPD’s sturdy backlog of pure growth initiatives, with notable initiatives anticipated to return on-line subsequent yr and gasoline the company’s growth. The analyst moreover expects the company to study from the not too way back achieved 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,” talked about Scotto.
Scotto ranks No. 20 amongst higher than 9,100 analysts tracked by TipRanks. Her scores have been worthwhile 70% of the time, delivering a imply return of 21.6%. See EPD Stock Buybacks on TipRanks.
International Business Machines
We switch to the next dividend stock, IBM (IBM). The tech massive not too way back reported mixed outcomes for the third quarter. Earnings exceeded analysts’ estimates, nevertheless the excessive line fell wanting expectations as a result of the sturdy growth in Software revenues was partially offset by lower Consulting and Infrastructure revenues.
In Q3, IBM generated free cash flow into of $2.1 billion and returned $1.5 billion to shareholders via dividends. IBM stock presents a dividend yield of three.1%.
Following investor conferences with IBM administration, Evercore analyst Amit Daryanani reaffirmed a purchase order rating on IBM stock with a worth objective of $240. The analyst mentioned 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 artificial intelligence positioning, Daryanani thinks that IBM is ready to addressing the AI different in every its Software and Consulting corporations. He highlighted that IBM’s AI e-book of enterprise has elevated to higher than $3 billion, up from $1 billion 1 / 4 previously, with about 80% of the bookings coming from the Consulting enterprise.
Daryanani well-known the power in IBM’s Software enterprise and expects this momentum to proceed, pushed by persistent growth in Red Hat (acquired in 2019), transaction processing growth, demand for AI/information choices, and mergers and acquisitions. Further, the analyst expects the Consulting enterprise to recuperate subsequent yr.
Overall, Daryanani is assured about IBM’s prospects beneath the administration of CEO Arvind Krishna. He is optimistic regarding the agency’s capability to develop its income at a greater price than revenue, due to the rising Software mix, working scale and value optimization efforts.
Daryanani ranks No. 316 amongst higher than 9,100 analysts tracked by TipRanks. His scores have been worthwhile 58% of the time, delivering a imply return of 12.3%. See IBM Hedge Fund Activity on TipRanks.
Ares Capital
Finally, let’s check out Ares Capital (ARCC), a specialty finance agency that offers financing choices to personal middle-market corporations. ARCC not too way back reported sturdy third-quarter outcomes, attributing them to sturdy new funding train and healthful credit score rating effectivity.
Also, Ares Capital announced a dividend of 48 cents per share for the fourth quarter, payable on Dec. 30. ARCC stock presents a dividend yield of 8.9%.
Following the Q3 print, RBC Capital analyst Kenneth Lee reaffirmed a purchase order rating on the stock and barely raised the worth objective 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 changes in dividend income assumptions. Nonetheless, he’s optimistic regarding the agency’s potential attributable to its sturdy credit score rating effectivity and fewer draw again risk owing to a optimistic macro backdrop.
Lee highlighted that ARCC’s portfolio train was higher than anticipated, with Q3 witnessing web additions of higher than $1.32 billion, so much higher than RBC’s estimate of over $800 million. He moreover well-known the company’s improved credit score rating effectivity, with non-accruals shifting proper all the way down to 1.3% in Q3 from 1.5% inside the second quarter.
Overall, Lee thinks that ARCC has the potential to ship above peer-average return on equity and views its scale as a aggressive profit.
Lee ranks No. 34 amongst higher than 9,100 analysts tracked by TipRanks. His scores have been worthwhile 70% of the time, delivering a imply return of 17.2%. See ARCC Stock Charts on TipRanks.
