Top Wall Street analysts are bullish on these dividend stocks

With the Federal Reserve now on a rate-cutting campaign, dividend stocks may soon get their moment in the spotlight.

Investors looking for lucrative dividend-paying stocks can track the recommendations of top analysts, who consider various aspects like a company’s fundamentals and consistency in dividend payments before selecting a stock.

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.

This week’s first dividend pick is oil and gas giant Exxon Mobil (XOM). The company recently announced better-than-anticipated third-quarter results, driven by a solid rise in production. It is worth noting that the company achieved its highest liquids production in over 40 years with 3.2 million barrels per day.

The dividend aristocrat returned $9.8 billion to shareholders in the third quarter. Moreover, the company increased its quarterly dividend by 4% to 99 cents per share. With this hike, Exxon has increased its dividends for 42 consecutive years. XOM stock offers a forward dividend yield of 3.3%.

Following the Q3 print, Evercore analyst Stephen Richardson reiterated a buy rating on Exxon stock with a price target of $135. The analyst noted that the company’s strategy to invest through the cycle trough and boost spending on major projects and acquisitions like that of Pioneer Natural Resources boosted the prospects of its Upstream business.

“The benefit of incremental investments and perhaps more importantly the high grading of the asset base has put XOM on a different competitive footing vs. the industry but also vs. its own historical results,” said Richardson.

The analyst noted that the company’s cash flow from operations, excluding working capital changes, of $15.2 billion was flat on a quarter-over-quarter basis but exceeded his expectations by nearly $1.1 billion. He also highlighted that Exxon’s net debt declined by $1.1 billion in the quarter, reflecting $2.3 billion of net working capital inflow.

Richardson ranks No. 924 among more than 9,100 analysts tracked by TipRanks. His ratings have been profitable 61% of the time, delivering an average return of 9.6%. See Exxon Ownership Structure on TipRanks.

We move to another energy player, Coterra Energy (CTRA). It is an exploration and production company with operations focused in the Permian Basin, Marcellus Shale and Anadarko Basin. In the third quarter, shareholder returns represented 96% of the company’s free cash flow (FCF) and included a quarterly base dividend of 21 cents per share and share repurchases worth $111 million. 

Coterra Energy aims to return 50% or greater of its annual FCF to shareholders and recently highlighted that it has returned 100% year to date. CTRA stock offers a dividend yield of 3%.

On Nov. 13, Coterra announced two separate definitive agreements to acquire certain assets of Franklin Mountain Energy and Avant Natural Resources and its affiliates for a total amount of $3.95 billion. The company thinks that the acquisition of these two Permian Basin asset packages will expand its core area in New Mexico and boost its organizational strengths.

Reacting to the news, Mizuho analyst Nitin Kumar reaffirmed a buy rating on the stock with a price target of $37 and a “Top Pick” designation. He said that while the assets being acquired are less attractive than Coterra’s existing Permian inventory on the basis of pure well productivity, their higher oil mix and lower well costs offset this shortcoming.

While Kumar thinks that these acquisitions are not transformative, he remains bullish on CTRA’s long-term prospects and thinks that “as the lowest-cost producer of gas, CTRA should be able to support above-peer cash generation even at lower prices or wide differentials, which complement oil-driven FCF from the Permian.”

Kumar ranks No. 187 among more than 9,100 analysts tracked by TipRanks. His ratings have been profitable 64% of the time, delivering an average return of 14.3%. See Coterra Energy Stock Charts on TipRanks.

Finally, let’s look at Walmart (WMT). The big-box retailer delivered impressive third-quarter results and raised its full-year guidance, thanks to the strength in its e-commerce business and improvement in categories beyond groceries.

Earlier this year, Walmart raised its annual dividend per share by about 9% to 83 cents per share, marking the 51st consecutive year of dividend increases.

Following the results, Jefferies analyst Corey Tarlowe increased the price target for WMT stock to $105 from $100 and reaffirmed a buy rating. The analyst noted that the company’s same-store sales continued to be fueled by increased transactions, higher unit volumes and favorable general merchandise trends.

Tarlowe highlighted that improvement in Walmart’s margins helped deliver better-than-expected earnings in the quarter. Specifically, WMT’s Q3 gross margin improved by about 20 basis points due to several reasons like increased e-commerce profitability, inventory management and a favorable business mix. Further, the operating margin expanded by 10 basis points, thanks to drivers like increased gross margin and higher membership income.

The analyst also noted the improvement in general merchandise sales in Walmart U.S., supported by factors such as enhanced assortment and share gains across all income cohorts. 

Overall, Tarlowe is bullish on the stock and remains “incrementally encouraged by WMT’s ability to offer customers improved value, witness robust growth, and gain share ahead.”

Tarlowe ranks No. 331 among more than 9,100 analysts tracked by TipRanks. His ratings have been profitable 67% of the time, delivering an average return of 17.6%. See Walmart Hedge Fund Activity on TipRanks.