Top Wall Street analysts favor these five dividend stocks during tumultuous times

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A sign bearing the logo for communications and security tech giant Cisco Systems Inc. is seen outside one of its offices in San Jose, California, Aug. 11, 2022.
Paresh Dave | Reuters

The market’s volatility as of late is making dividend-paying stocks seem all the more appealing to investors in search of some stability.

Investors must check the fundamentals of the dividend-paying company and its ability to sustain those payments over the long run before adding the stock to their portfolio.

Bearing that in mind, 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.

Civitas Resources  

First on this week’s dividend list is Civitas Resources (CIVI), an oil and gas producer focused on assets in the Denver-Julesburg and Permian Basins. The company paid a dividend of $1.74 per share in late September, which included a quarterly base dividend of 50 cents per share and a variable dividend of $1.24.  

Civitas recently announced an agreement with Vencer Energy to acquire oil-producing assets in the Midland Basin of West Texas for $2.1 billion. The acquisition, anticipated to close in January 2024, is expected to boost CIVI’s free cash flow per share by 5% in 2024.  

Jefferies analyst Lloyd Byrne has a constructive view on the acquisition, as it enhances the company’s scale in the Midland at a relatively low price.

“We believe CIVI acquired one of the few Permian privates remaining that is accretive to asset quality,” said Byrne.

In line with his optimism on the deal, Byrne raised his price target for CIVI to $102 from $100 and reiterated a buy rating, saying that the stock remains cheap given an estimated free cash flow yield of about 23% in 2024.

Byrne ranks No. 64 among more than 8,500 analysts tracked by TipRanks. His ratings have been profitable 62% of the time, with each delivering an average return of 32.1%. (See Civitas’ Stock Charts on TipRanks)  

Bristol Myers Squibb

Next up is biopharmaceutical company Bristol Myers Squibb (BMY). In September, the company announced a quarterly dividend of 57 cents per share, payable on Nov. 1. This dividend marks a year-over-year increase of 5.6%. BMY’s dividend yield stands at 4%.

On Oct. 8, BMY announced an agreement to acquire biotechnology company Mirati Therapeutics for a total consideration of up to $5.8 billion. The acquisition is expected to bolster the company’s oncology portfolio and help mitigate the loss of sales due to patent expirations in the years ahead. Importantly, BMY will gain access to Krazati, a key lung cancer medicine, which was approved in December 2022.

Given the ongoing commercial launch of Krazati, Goldman Sachs analyst Chris Shibutani views the proposed deal as a strategic positive for BMY, “potentially providing a bridge as its new product portfolio continues to seek its footing while its expansive developmental-stage pipeline incubates with much of its value not to be realized in the near-term.”

Krazati generated sales of over $13 million in the second quarter of 2023 and Goldman Sachs currently estimates the drug will deliver sales of $347 million, $1.8 billion, and $2.1 billion in 2025, 2030, and 2035, respectively. Overall, the analyst expects the Mirati acquisition to provide both commercial and pipeline support to Bristol Myers Squibb.

Shibutani reiterated a buy rating on BMY with a price target of $81. He holds the 288th position among more than 8,500 analysts on TipRanks. Moreover, 42% of his ratings have been profitable, with each generating an average return of 18.9%. (See BMY Blogger Opinions & Sentiment on TipRanks)

Chesapeake Energy

Another Goldman Sachs analyst, Umang Choudhary, is bullish on oil and gas exploration and production company Chesapeake Energy (CHK). The company returned about $515 million to shareholders year-to-date through the second quarter via base and variable dividends and share repurchases. 

It recently hiked its quarterly base dividend per share by 4.5% to $0.575. Considering only the base dividend, CHK offers a dividend yield of about 2.6%.

Following a meeting with Chesapeake’s management, Choudhary reaffirmed a buy rating on the stock with a price target of $91. The analyst noted that given the uncertainty in the natural gas price outlook, the company is focused on maintaining operational flexibility to adjust its capital expenditure based on gas prices.

The analyst added, “Management reiterated its focus on maintaining a strong balance sheet (including moving to investment grade) and capital returns (including growing fixed dividend + variable dividend based on commodity prices and counter-cyclical share repurchases).”

Choudhary ranks No.478 among more than 8,500 analysts tracked by TipRanks. His ratings have been profitable 77% of the time, with each delivering a return of 39.4%, on average. (See Chesapeake Insider Trading Activity on TipRanks)

EOG Resources

Let’s look at another energy company: EOG Resources (EOG). Back in August, the company declared a quarterly dividend of $0.825 per share, payable on Oct. 31. Based on this quarterly dividend, the annual dividend rate comes to $3.30 per share, bringing the dividend yield to 2.5%.

Under its cash return framework, EOG is committed to return a minimum of 60% of annual free cash flow to shareholders through regular quarterly dividends, special dividends and share repurchases. EOG generated free cash flow of $2.1 billion in the first six months of 2023. Overall, the company’s robust free cash flow supports its attractive shareholder returns.

Ahead of the company’s third-quarter results, due in early November, Mizuho analyst Nitin Kumar reiterated a buy rating on EOG stock and slightly raised the price target to $158 from $157.

The analyst thinks that investors will likely focus on a potential special dividend and a hike in base dividend, as EOG continues to generate strong free cash flow. They might also pay attention to inventory depth and quality due to the underperformance of Eagle Ford and Permian wells. The analyst expects third-quarter 2023 EBITDA of $3.205 billion compared to the consensus estimate of $3.185 billion.

“We estimate a modest (~0.6%) beat on 3Q23 EBITDA from EOG with volumes in-line and pricing slightly ahead of consensus,” said Kumar.

Kumar ranks No.33 among more than 8,500 analysts on TipRanks. His ratings have been profitable 75% of the time, with each delivering an average return of 20.4%. (See EOG Financial Statements on TipRanks)

Cisco Systems

Computer networking giant Cisco Systems (CSCO) is the final dividend stock in this week’s list. The company returned $10.6 billion to shareholders through cash dividends and stock repurchases in fiscal 2023 (ended July 29). Fiscal 2023 marked the 12th consecutive year in which the company increased its dividend. Cisco offers a dividend yield of 2.9%.

Tigress Financial analyst Ivan Feinseth recently reiterated a buy rating on Cisco stock and increased the price target to $76 from $73. (See Cisco Hedge Fund Trading Activity on TipRanks). 

The analyst is bullish on the company’s long-term prospects and expects it to continue to benefit from higher spending on information technology due to the need for increased speed, network security and artificial intelligence implementation. He also expects the recently announced acquisition of cybersecurity firm Splunk to be an additional growth catalyst.

“CSCO’s industry-leading position and strong brand equity enable it to benefit from key secular IT trends, including cloud migration, AI development, the high-speed 5G network rollout, WiFi 6, and the increasing connectivity needs of the IoT [internet of things],” said Feinseth.

Overall, the analyst thinks that Cisco’s solid balance sheet and strong cash flows could support its growth initiatives, strategic acquisitions and enhance shareholder returns.

Feinseth holds the 349th position among more than 8,500 analysts on TipRanks. His ratings have been successful 57% of the time, with each rating delivering an average return of 9.6%.

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