The stock market has been coasting on enthusiasm as President Donald Trump takes the reins, but plenty of questions remain over tax cuts and tariffs. Dividend-paying stocks can offer investors some cushioning if the market becomes rocky.
Amid an uncertain macro backdrop, investors looking for stable returns can add some solid dividend stocks to their portfolios. To select the right dividend stocks, investors can consider insights from top Wall Street analysts, as they analyze a company’s ability to pay consistent dividends, backed by solid cash flows.
Here are three dividend-paying stocks, highlighted by Wall Street’s top pros as tracked by TipRanks, a platform that ranks analysts based on their past performance.
AT&T
This week’s first dividend stock is telecommunications company AT&T (T). Recently, the company announced a quarterly dividend of $0.2775 per share, payable on Feb. 3. AT&T stock offers a dividend yield of nearly 5%.
Recently, Argus Research analyst Joseph Bonner upgraded AT&T stock to buy from hold, with a price target of $27. Bonner’s bullish stance follows AT&T’s analyst day event, where the company discussed its strategy and long-term financial goals.
Bonner noted that management raised its 2024 adjusted EPS outlook and revealed strong estimates for shareholder returns, earnings and cash flow growth, as AT&T “finishes extricating itself from some troublesome acquisitions and focuses on the convergence of wireless and fiber internet services.”
The analyst expects the company’s cost-saving efforts, network modernization, and revenue acceleration to gradually reflect in its performance. He thinks that management’s vision of capturing opportunities arising from the convergence of wireless and fiber, along with the company’s strategic investments, provides a compelling outlook for future growth and shareholder returns.
Bonner noted that at the analyst day event, AT&T indicated that neither dividend hikes nor M&A are under consideration while the company invests in 5G and fiber broadband networks and continues to reduce its debt. That said, management is committed to protecting its dividend payments after reducing them by almost half in March 2022. Bonner highlighted that AT&T plans to return $40 billion to shareholders in 2025-2027 via $20 billion in dividends and $20 billion in share repurchases.
Bonner ranks No. 310 among more than 9,300 analysts tracked by TipRanks. His ratings have been profitable 67% of the time, delivering an average return of 14.1%. See AT&T Stock Buybacks on TipRanks.
Chord Energy
We move to Chord Energy (CHRD), an independent oil and gas company operating in the Williston Basin. Under its capital returns program, Chord Energy aims to return more than 75% of its free cash flow. The company recently paid a base dividend of $1.25 per share and a variable dividend of 19 cents per share.
Ahead of Chord Energy’s Q4 2024 results, Mizuho analyst William Janela reiterated a buy rating on the stock with a price target of $178, calling CHRD a Top Pick. The analyst said that his Q4 2024 estimates for CFPS (cash flow per share) and EBITDX (earnings before interest, tax, depreciation and explorations costs) are essentially in line with the Street’s estimates.
Janela added that compared to its peers, there is more visibility in Chord Energy’s outlook for this year, as it has already issued its preliminary guidance. Further, he expects the company to show enhanced capital efficiencies on a year-over-year basis, given that it has fully integrated the assets from the Enerplus acquisition.
“A more defensive balance sheet (~0.2x net debt/EBITDX, one of the lowest among E&P peers) also leaves CHRD well-positioned in a volatile oil price environment,” said Janela.
While CHRD stock underperformed its peers in 2024, the analyst noted that shares are now trading at a wider discount to peers on EV/EBITDX and FCF/EV basis, which he thinks underappreciates the company’s improved scale and high-quality inventory in the Bakken basin following the Enerplus acquisition. Finally, based on his Q4 2024 free cash flow (FCF) estimate of $235 million, Janela expects about $176 million of cash return, including $76 million in base dividends. He expects the majority of the variable FCF portion to reflect share buybacks, like in the third quarter.
Janela ranks No. 656 among more than 9,300 analysts tracked by TipRanks. His ratings have been profitable 52% of the time, delivering an average return of 19.2%. See Chord Energy Insider Trading Activity on TipRanks.
Diamondback Energy
Another Mizuho analyst, Nitin Kumar, is bullish on Diamondback Energy (FANG), an independent oil and natural gas company that is focused on reserves in the Permian Basin. The company paid a base dividend of 90 cents a share for Q3 2024.
The company is scheduled to announce its results for the fourth quarter of 2024 in late February. Kumar expects FANG to report Q4 2024 EBITDA, free cash flow, and capital expenditure of $2.543 billion, $1.243 billion and $996 million, against Wall Street’s consensus of $2.485 billion, $1.251 billion, and $1.004 billion, respectively.
The analyst stated that the fact that FANG has maintained its preliminary outlook for 2025, which it issued while announcing the Endeavor Energy Resources acquisition in February 2024, reflects strong execution and modest cost savings.
Overall, Kumar reaffirmed a buy rating on FANG stock with a price target of $207. He highlighted that “FANG is a leader in cash return payouts, with 50% of free cash now returned to investors, including a high base dividend yield.”
He added that the company’s high dividend yield reflects its superior cost control and unit margins. Moreover, the analyst thinks that with the completion of the Endeavor acquisition, the scale and quality of the combined asset base are impressive.
Kumar ranks No. 119 among more than 9,300 analysts tracked by TipRanks. His ratings have been profitable 67% of the time, delivering an average return of 14.1%. See Diamondback Ownership Structure on TipRanks.
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