Top Wall Street analysts select these dividend stocks to enhance returns

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Verizon CEO Hans Vestberg on the floor at the New York Stock Exchange (NYSE) in New York, U.S., October 22, 2019.

Brendan McDermid

When markets get choppy, dividends offer investors’ portfolios some cushioning in the form of income.

Dividends provide a great opportunity to enhance investors’ total returns over a long-term horizon. Investors should not base their stock purchase decisions solely on dividend yields. They must also consider the company’s financial strength and consistency in making payments. Analysts have insight into those details.

To that effect, here are five attractive dividend stocks, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.

Verizon Communications

Let us first look at telecommunication giant Verizon (VZ). The stock has a dividend yield that is 8%. The company announced a quarterly dividend last week of 66.50cents per share outstanding, an increase by 1.25cents over the previous quarter. This marked the 17th consecutive year the company’s board approved a quarterly dividend increase.

Recently, Citi analyst Michael Rollins upgraded Verizon and its rival AT&T (T) to buy from hold. Analyst Michael Rollins increased Verizon’s stock price by $1, to $40. AT&T was kept at $17.

Rollins pointed out that investors have been affected by several factors, including competition, industry structure and higher rates. Rollins is ranked No. 298 out of more than 8,500 analysts on TipRanks. He has a more positive outlook for large-cap telecom stocks. The analyst argued that Verizon’s and AT&T’s recent price increases indicate a competitive background for wireless. He further noted that customers continue to hold onto their phones for longer, which is reducing device upgrade costs and stabilizing churn.

Overall, the analyst sees the possibility of some of the ongoing market concerns fading over the next 12 months. He also expects that the prospect of improved free cash flows will lower net debt leverage, and support dividend payments.

Rollins’ success rate is 65%, and his average return on each rating has been 13.3%. (See Verizon Hedge Fund Trading Activity on TipRanks)

Medtronic

Medical device company

Medtronic

(MDT) recently announced a quarterly dividend of $0.69 per share for the second quarter of fiscal 2024, payable on Oct. 13. MDT’s annual dividend has been increasing for 46 years in a row. It has a 3.5% dividend yield. The analyst believes that Medtronic is well-positioned to consistently deliver higher growth and margins than expected. He expressed his optimism regarding the company’s transformation under CEO Geoff Martha. Wise’s ratings are profitable in 58% of cases, with an average return of 6.3%. (See Medtronic Insider Trading Activity on TipRanks) HasbroAnother Stifel analyst, Drew Crum, is bullish on toymaker

Hasbro

(HAS). He increased the price target for Hasbro to $94 from $79 while maintaining a buy rating, and moved the stock to the Stifel Select List.

Crum acknowledged that HAS stock has been a relative laggard over the past several years due to many fundamental issues that resulted in unhappy investors.

Nevertheless, the analyst is optimistic about the stock and expects higher earnings power and cash flow generation, driven by multiple catalysts like portfolio adjustments, further cost discipline, greater focus on gaming and licensing, as well as a new senior leadership team.

Crum noted that Hasbro grew its dividend for 10 consecutive years (2010-2020) at a compound annual growth rate of over 13%, with the annual payout representing more than 50% of free cash flow, on average. After the Entertainment One acquisition in 2021-2023, there was only one upward adjustment. Crum also said that, given the expectation of increased cash flow, “the company will have more flexibility in terms of increasing its dividend moving forward.” “

Crum is ranked 322nd out of more than 8,500 analysts monitored by TipRanks. He has been profitable in 59% of his ratings, and each one has delivered an average return on investment of 12.9%. (See Hasbro Stock Chart on TipRanks)Dell TechnologiesNext up is

Dell

(DELL), a maker of

IT hardware and infrastructure technology, which rallied after its fiscal second-quarter results far exceeded Wall Street’s estimates. In that quarter, the company returned $525,000,000 to its shareholders in dividends and share repurchases. DELL offers a dividend yield of 2.1%.

Evercore analyst Amit Daryanani maintained a buy rating following the results and raised his price target for DELL stock to $70 from $60. Daryanani ranks No. The analyst noted that Dell’s July quarter revenue and earnings-per-share (EPS) grew by a significant amount, driven by strong performance across infrastructure and client segments. The analyst noted that Dell generated over $8 billion in free cash flow for the trailing 12 months. This implies the company has “plenty of dry powder” to significantly enhance its capital allocation program. Daryanani said that DELL’s catalysts are beginning to come together in a significant way, including a cap allocation update at their upcoming analyst event, AI-centric revenue acceleration, and the potential inclusion of the S&P 500. (See Dell’s Financial Statements on TipRanks)

Walmart

We finally come to big-box retailer

Walmart (WMT), which is a dividend aristocrat. The company increased its dividend by 2% in fiscal 2024, to $2.28 a share. WMT’s dividend yield is 1.4%. WMT’s dividend yield stands at 1.4%.Following WMT’s upbeat fiscal second-quarter results and upgraded full-year outlook, Baird analyst Peter Benedict highlighted that traffic gains in stores and online channels reflect that consumers are choosing Walmart for a blend of value and convenience. Benedict also noted that the company’s efforts to drive improved productivity and profitability are gaining traction. The analyst reiterated his buy rating for WMT, raising the price target from $165 to $180. He also noted that the company is making progress in improving productivity and profitability.

Benedict is ranked 94th out of more than 8,500 analysts monitored by TipRanks. His predictions have delivered a return on average of 13.7%. (See Walmart’s Technical Analysis of TipRanks).