Investors seeking stable income and diversification may appreciate adding dividend stocks to their portfolio.
Finding the right names takes some additional legwork, and investors will want to consider the names highlighted by Wall Street analysts. These professionals make recommendations after thoroughly analyzing a company’s financial strength and its ability to pay consistent dividends.
Here are three dividend-paying stocks, highlighted by Wall Street’s top pros on TipRanks, a platform that ranks analysts based on their past performance.
Energy Transfer
The first dividend stock pick this week is Energy Transfer (ET), a midstream energy company with over 130,000 miles of pipeline and related infrastructure across 44 states. Structured as a limited partnership, ET offers a dividend yield of 7.8%.
Energy Transfer is scheduled to announce its quarterly results on Nov. 6. Heading into Q3 earnings, RBC Capital analyst Elvira Scotto adjusted her estimates for U.S. midstream companies. The analyst modestly raised the price target for ET stock to $20 from $19 and reiterated a buy rating.
Scotto is optimistic about ET due to its exposure to the Permian Basin. Also, the analyst views the company as one of the potential data center/AI beneficiaries and thinks that this positive is not factored into the stock price.
The analyst raised the estimates for ET to reflect the impact of the acquisition of WTG Midstream Holdings, completed in July 2024. The revised estimates also reflect the favorable impact of Sunoco’s acquisition of NuStar Energy, as Energy Transfer owns about 21% of the outstanding common units of Sunoco.
Overall, Scotto is bullish about ET’s extensive asset footprint and believes that it is “well positioned to generate meaningful cash flow growth, which when combined with its stronger balance sheet, should allow ET to return more cash to unitholders mostly through distribution increases.”
Scotto ranks No. 25 among more than 9,100 analysts tracked by TipRanks. Her ratings have been profitable 69% of the time, delivering an average return of 21.6%. See Energy Transfer Ownership Structure on TipRanks.
Diamondback Energy
We move to independent oil and natural gas company Diamondback Energy (FANG). The company is focused on the reserves in the Permian Basin and bolstered its business by acquiring Endeavor Energy. For the second quarter, FANG paid a base cash dividend of 90 cents per share and a variable dividend of $1.44 per share.
Recently, JPMorgan analyst Arun Jayaram boosted the price target for FANG stock to $205 from $182 and reaffirmed a buy rating on the stock, noting that the company is “hitting the ground running” in terms of its Endeavor merger integration. He added that Diamondback seems to be rapidly advancing toward its $550 million per year synergy target.
FANG is scheduled to announce its Q3 results on Nov. 4. Jayaram feels that the possibility of Diamondback announcing a better-than-anticipated capital-efficient outlook for 2025 could act as one of the catalysts for its stock. The analyst expects the company to issue improved guidance based on solid well productivity trends and notable efficiency gains since the first quarter of the year.
The analyst contends that FANG stock deserves a premium valuation due to superior capital efficiency compared to peers and improved inventory position since the completion of the Endeavor deal. He highlighted that Diamondback is well-positioned at the low end of the cost curve in the Midland Basin and remains focused on further enhancing its efficiency.
Overall, Jayaram believes that Diamondback continues to be one of the best operators in U.S. shale and could deliver flat to low-single-digit volume growth while returning 50% of free cash flow to shareholders on a quarterly basis.
Jayaram ranks No. 893 among more than 9,100 analysts tracked by TipRanks. His ratings have been successful 53% of the time, delivering an average return of 8.6%. See Diamondback Energy Stock Charts on TipRanks.
Cisco Systems
This week’s third dividend stock is networking giant Cisco (CSCO). CSCO offers a dividend yield of 2.9%.
Tigress Financial analyst Ivan Feinseth slightly raised the price target for CSCO stock to $78 from $76 and reaffirmed a buy rating on the stock. The analyst expects the company to benefit from its shift to smart artificial intelligence-driven networks and the increase in cybersecurity integration, given the rise in enterprise spending on high-speed network and network security.
Moreover, the analyst expects Cisco to gain from the shift in its focus from hardware to software and subscription-based services, mainly in cloud and security solutions. Feinseth anticipates that this transition will drive higher margins and increase the consistency of recurring revenues.
He expects the company’s $28 billion acquisition of Splunk to support its AI and security software development, enhance its go-to-market ability and customer service, and boost its subscription and recurring revenue.
Finally, Feinseth is confident about Cisco’s ability to increase shareholder returns, with the company committed to returning 50% of its free cash flow to shareholders via dividends and share repurchases. The company has increased its dividend every year since it started paying them in 2011.
Feinseth ranks No. 185 among more than 9,100 analysts tracked by TipRanks. His ratings have been profitable 62% of the time, delivering an average return of 14%. See Cisco Stock Buybacks on TipRanks.