In today’s unpredictable market conditions, investors often seek out dividend-paying stocks as a means of generating income and providing stability to their portfolio during challenging times. With a vast array of companies offering dividends, the task of selecting the right stocks can be daunting. One approach investors can take is to consider the recommendations of Wall Street experts who conduct in-depth analyses of a company’s earnings growth potential and dividend track record. Here, we will delve into three attractive dividend stocks highlighted by Wall Street’s top professionals on TipRanks, a platform that ranks analysts based on their past performance.
One of the top picks this week is tech giant IBM (IBM), which recently reported mixed first-quarter results. Although the company’s earnings surpassed expectations, its revenue fell short of estimates amid an uncertain macroeconomic backdrop. IBM also made headlines with its announcement of a $6.4 billion acquisition of cloud software maker HashiCorp. In the first quarter, IBM paid out dividends totaling $1.5 billion, reflecting a positive commitment to rewarding shareholders. The company reported free cash flow of $1.9 billion in Q1 2024 and anticipates generating free cash flow of approximately $12 billion for the full year, with a current yield of around 4%.
Moving on to toymaker Hasbro (HAS), the company delivered better-than-expected first-quarter earnings thanks to its turnaround efforts. In Q1 2024, Hasbro distributed dividends amounting to $97.2 million, boasting a dividend yield of 4.7%. Following discussions with Hasbro’s management at JPMorgan’s 52nd Annual TMC Conference, JPM analyst Christopher Horvers upgraded the stock from hold to buy, alongside raising the price target to $74 from $61. Horvers’ estimates for Hasbro surpassed the consensus forecasts, as the market seemed to underestimate the company’s cost efficiency initiatives and digital gaming opportunities. The analyst is bullish on the industry’s growth prospects for 2024, particularly with the recovery expected in low-ticket and short replacement cycle product categories.
Lastly, let’s examine big-box retailer Target (TGT). In the first quarter of 2024, Target distributed $508 million in dividends to shareholders, offering a dividend yield of 2.8%. Following the company’s first-quarter results, Baird analyst Peter Benedict commented on the slight miss in earnings per share expectations, attributing it to higher operating expenses offsetting gains in gross margin. Benedict believes that the market overreacted to the post-earnings selloff in TGT stock, driven by lower-than-expected earnings and price adjustments by the company. He views Target’s strategic focus on value and affordability through competitive pricing as a positive move for fiscal 2024. Benedict is optimistic about the company’s prospects for positive comparable sales growth in the second quarter, citing management’s prudent planning and adaptability in a value-conscious consumer environment.
The selection of dividend stocks plays a crucial role in investor portfolios, offering income and stability in volatile markets. By heeding the advice of seasoned Wall Street analysts and considering factors such as earnings potential, dividend track record, and growth prospects, investors can make informed decisions to enhance their investment strategies. As showcased by the highlighted dividend stocks – IBM, Hasbro, and Target – there are opportunities to capitalize on dividend-paying companies that align with long-term financial goals.