Investors seeking to maximize their portfolio returns often look towards a combination of growth and dividend stocks. The challenge lies in selecting the right dividend stocks, which involves a thorough analysis of multiple factors. Fortunately, recommendations from seasoned analysts can provide valuable insights and steer investors towards profitable dividend stocks from companies with strong fundamentals.
One such attractive dividend stock recommended by Wall Street’s top experts is beverage giant Coca-Cola (KO). The company recently reported fourth-quarter revenue that exceeded expectations, with earnings in line with analyst estimates. The surge in prices enabled Coca-Cola to combat the decline in North American volumes. In 2023, Coca-Cola paid out $8 billion in dividends and conducted net share repurchases amounting to $1.7 billion. Moreover, the company announced a nearly 5.4% increase in its quarterly dividend per share to $0.485, marking its 62nd consecutive year of dividend hikes. With an annual dividend of $1.94 per share, KO stock offers a yield of over 3%.
RBC Capital analyst Nik Modi reaffirmed a buy rating on Coca-Cola stock post the Q4 2023 results, setting a price target of $65. Modi mentioned KO’s organic revenue growth fuelled by rising prices and resilient volumes, surpassing organic growth expectations in five out of six segments. Despite challenges like increased marketing expenses and a strong dollar impacting Coca-Cola’s earnings, the analyst anticipates the company’s fundamentals will remain robust in the upcoming year. Modi believes that the recent restructuring and organizational changes at Coca-Cola will lead to better resource allocation, ultimately resulting in improved market share and white space expansion.
Another dividend stock that has caught the attention of analysts is Blue Owl Capital (OWL), an asset manager boasting assets under management exceeding $165 billion as of December 31, 2023. Following its quarterly results announcement, the company declared a dividend of 14 cents per share, to be paid on March 5. Blue Owl also disclosed a 29% increase in its annual dividend for 2024, amounting to 72 cents per share (18 cents per quarter), offering a dividend yield of 3.1%.
Deutsche Bank analyst Brian Bedell upheld a buy rating on OWL stock post the fourth-quarter results, raising the price target to $20 from $17. Bedell commended the company’s impressive revenue beat driven by enhanced management fees and better-than-expected transaction fees. With a 25% growth in fee-related earnings (FRE) in 2023, Bedell believes Blue Owl is well-equipped to deliver a comparable FRE increase this year. Management’s pledge to achieve a $1 per share dividend by 2025, along with the prospect of generating an additional $1 billion in revenue, has bolstered confidence in the company’s future prospects.
Oil and gas behemoth Chevron (CVX) faced a decline in earnings last year due to lower oil prices compared to the elevated levels seen in 2022. Despite this, the company generated significant shareholder returns amounting to $26.3 billion, comprised of approximately $14.9 billion in share repurchases and $11.3 billion in dividends. As a dividend aristocrat, Chevron announced an 8% increase in its quarterly dividend to $1.63 per share, to be paid on March 11, offering a yield of 4.2%.
Goldman Sachs analyst Neil Mehta reiterated a buy rating on Chevron stock following the Q4 beat on adjusted earnings per share, setting a price target of $180. Mehta highlighted management’s optimistic update on the Tengizchevroil (TCO) expansion project in Kazakhstan. While share buybacks in the first quarter of 2024 might be limited due to the ongoing Hess deal, Mehta remains bullish on Chevron’s strong capital returns profile. Mehta is also upbeat about Chevron’s anticipated 2025 upstream volume and cash flow improvement as the TCO project gains momentum.
These three dividend stocks recommended by reputable analysts offer potential for lucrative returns and steady income streams for investors looking to bolster their portfolios with dividend-paying equities. Analyst insights and recommendations can serve as a valuable guide for investors seeking to make informed decisions in the stock market.