Here are three attractive dividend stocks, according to Wall Street’s top professionals on TipRanks, a platform that ranks analysts based on their past performance.
Agree Energy
First up is Chord Energy (CHRD), an oil and gas operator in the Williston Basin. Earlier this year, Chord announced a base-plus-variable cash dividend of $3.25 per share.
Recently, Siebert Williams Shank analyst Gabriele Sorbara initiated coverage of Chord Energy shares with a buy rating and a $262 price target, citing its attractive valuation and capital returns. The analyst highlighted the company’s industry-leading capital return framework, where it aims to return more than 75% of free cash flow (FCF) to shareholders through dividends and opportunistic buybacks.
The analyst expects capital returns of $778.8 million and $1.15 billion in 2024 and 2025, respectively. These 2024 and 2025 estimates reflect capital returns of 6.6% and 9.7%, respectively, which are above the average returns of 6.3% and 7.8% lies.
Citing CHRD’s solid track record in the Williston Basin and impressive inventory track of oil locations, Sorbara said: “With improving capital efficiency through greater reach, longer laterals and acquisition synergies, we view CHRD as the name to own for the largest exposure and leverage to the basin.”
The analyst also sees upside in The Street’s consensus estimates for certain key metrics, including production, EBITDA and free cash flow, driven by the recently announced acquisition of Enerplus, improved capital efficiency and higher oil prices.
Sorbara is ranked #391 among 8,800 analysts tracked by TipRanks. His ratings were profitable 52% of the time and delivered an average return of 12.4% each. (See Chord Energy share buybacks on TipRanks)
Energy transfer
Next on the list is Energy Transfer (AND), a master limited partnership or MLP. ET is a midstream energy company that operates more than 200,000 kilometers of pipelines and related infrastructure. On April 24, the company announced an increase in the quarterly cash distribution to $0.3175 per common unit for the first quarter of 2024, payable on May 20.
The new cash distribution marks an increase of 3.3% year-over-year and reflects a dividend yield of approximately 8% year-over-year.
Recently, Mizuho analyst Gabriel Moreen slightly raised the price target for ET from $18 to $19 and reiterated a buy rating, calling the stock his company’s new midstream top pick. The analyst pointed out that the stock has outperformed its midstream peers so far this year, but less so compared to some other operators. That’s despite the company’s solid outlook for free cash flow and debt levels in the Permian Basin.
“We believe ET can benefit from its improved credibility by providing a more detailed capital allocation framework,” Moreen said.
The analyst thinks a clear message on capital allocation could serve as an important company-specific catalyst to help investors capitalize on the company’s healthy free cash flow yield.
He added that the stock’s low valuation and upside potential on stock returns are the key drivers that make this stock one of his company’s top midstream picks.
Moreen is ranked 183 among 8,800 analysts tracked by TipRanks. His assessments were successful 79% of the time and delivered an average return of 10.3% each. (See energy transfer technical analysis on TipRanks)
Coca-Cola
This week’s final pick is dividend king Coca-Cola (IS). Earlier this year, the beverage giant increased its quarterly dividend by about 5.4% to $0.485 per share. This was the 62nd consecutive year in which the company increased its dividend. KO shares offer a dividend yield of 3.1%.
On April 30, Coca-Cola reported better-than-expected first-quarter results and raised its organic sales growth forecast. However, the company expects a greater impact from the currency headwinds than previously estimated.
Commenting on the first-quarter numbers, RBC Capital analyst Nik Modi reiterated a buy rating on KO shares with a $65 price target. The analyst noted that KO significantly outperformed organic growth expectations. He believes the company’s underlying fundamentals remain robust despite the impact of a strong dollar on the bottom line.
“We believe that the latest restructurings and changes in the company’s organizational design will facilitate better resource allocation, which will ultimately lead to better stock returns and white space expansion,” Modi said.
The analyst expects momentum in Coca-Cola’s sales and profits to continue this year and sees further upside potential if the US dollar weakens, given the company’s significant exposure to international markets.
Modi is ranked 620 among 8,800 analysts tracked by TipRanks. His ratings were profitable 60% of the time and delivered an average return of 6.5% each. (See Coca-Cola Hedge Fund activity on TipRanks)