Investors looking for stable sources of income during these uncertain times can consider adding attractive dividend stocks to their portfolios. However, choosing the right dividend stocks requires a thorough analysis of a company’s fundamentals and its ability to sustain dividend payments. To help investors make informed decisions, we have compiled three lucrative dividend stocks recommended by top analysts on Wall Street.

Brookfield Infrastructure Partners (BIP)

Brookfield Infrastructure Partners (BIP) operates a diversified portfolio of assets across the utilities, transport, midstream, and data sectors. The company recently made a quarterly distribution of $0.3825 per unit, reflecting a 6% year-over-year increase. With an annualized dividend yield of 4.9%, BIP presents an attractive option for dividend-seeking investors.

BMO Capital analyst Devin Dodge has reiterated a buy rating on BIP stock, considering it as one of his top ideas for 2024. He has raised the price target to $40, highlighting the impact of moderating long-term interest rates on his valuation methods. Dodge believes BIP’s valuation is compelling, and he predicts more than 6% growth in its annual distribution. He expects BIP to deliver a low double-digit increase in funds from operations (FFO) this year and beyond. Moreover, he sees room for an upside surprise compared to management’s outlook of FFO/unit growth of over 12% in the next one to three years.

Dodge also points out that Brookfield Infrastructure Partners has a solid pipeline of new investment opportunities, which are expected to generate returns above the company’s targeted range of 12% to 15%. He believes BIP offers a compelling risk/reward profile with its double-digit FFO/unit growth, attractive yield, and robust acquisition pipeline, which presents a potential rerating opportunity.

KeyCorp is a regional bank that recently announced its results for the fourth quarter of 2023. The bank reported a significant drop in its Q4 earnings due to charges associated with a special assessment from the Federal Deposit Insurance Corporation and other one-time items. However, KeyCorp remains an attractive dividend stock, offering a dividend of $0.205 per share for the first quarter of 2024, resulting in a yield of 5.6%.

RBC Capital analyst Gerard Cassidy has reiterated a buy rating on KEY stock and increased the price target to $15. He notes that KeyCorp’s net interest income guidance has been inconsistent, causing volatility in the stock. However, Cassidy believes that as investors shift their attention to credit quality in the next 12 to 18 months, KeyCorp will impress due to its conservative management of credit in the past five years.

Cassidy also highlights the strength of KeyCorp’s capital, with its estimated common equity tier one ratio increasing to 10% in Q4 2023. He expects higher levels of capital return later this year and into 2025. With a strong capital position, KeyCorp is well-positioned to reward shareholders through dividends and potentially repurchasing shares.

OneMain Holdings is a financial services company catering to the needs of non-prime customers who may have limited access to traditional lines of credit. With a quarterly dividend payment of $1 per share, OMF offers an attractive dividend yield exceeding 8%.

Deutsche Bank analyst Mark DeVries has initiated a buy rating on OMF stock with a price target of $68. DeVries believes that the recent period of elevated inflation acted as a “mini recession” for OMF’s target group of lower income borrowers. Consequently, the company has already faced credit deterioration and tightened underwriting, positioning it for an improving credit backdrop in the second half of 2024.

Despite paying out a high dividend yield, OneMain Holdings still generates excess cash and is considering the acquisition of additional smaller companies. DeVries recognizes that OMF’s expansion into newer markets, such as credit cards and auto loans, is vital for sustained growth. With a total addressable market of $100 billion in non-prime personal loans, OMF has significant growth potential.

In these uncertain times, investors need reliable sources of income. Dividend stocks can be an excellent addition to investment portfolios, providing investors with both income and potential capital appreciation. However, it is crucial to conduct thorough analysis and consider the recommendations of top analysts on Wall Street. Brookfield Infrastructure Partners, KeyCorp, and OneMain Holdings are three dividend stocks that have garnered positive reviews from industry experts. By carefully evaluating these companies’ fundamentals and their ability to sustain dividend payments, investors can make informed decisions to enhance their total returns.

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