Investors looking for dividend-paying stocks may find attractive opportunities in the current market environment. With the Federal Reserve expected to cut interest rates soon, dividend yields on stocks may become more appealing compared to other income-generating assets like bonds. However, the challenge lies in selecting the right dividend stocks from the vast universe of companies. In such cases, considering top analysts’ recommendations can be beneficial.
One such dividend stock highlighted by Wall Street’s top pros is EPR Properties (EPR), a real estate investment trust focused on experiential properties such as movie theaters, amusement parks, eat-and-play centers, and ski resorts. EPR offers an enticing dividend yield of 7.3%, making it an attractive choice for investors seeking income-generating assets.
Recently, RBC Capital analyst Michael Carroll upgraded his rating for EPR to buy from hold and raised the price target to $50 from $48. Carroll believes that the company has successfully navigated tough operating conditions, including the challenges posed by the Covid-19 pandemic and the actors/writers strikes. He expects EPR to deliver favorable results as these headwinds diminish over time.
Carroll’s optimism stems from the anticipation of a reacceleration in the theatrical box office in the coming years, which could drive higher percentage rents and strengthen the tenant base. Despite concerns about EPR’s significant exposure to theaters, management aims to reduce this exposure gradually. Additionally, worries about key tenant AMC seem to be easing, with the company taking strategic initiatives like capital raises and debt refinancing.
Moreover, Carroll emphasized that EPR’s high dividend yield is well-protected by its nearly 70% adjusted funds from operations payout ratio and a solid balance sheet with a 5.2-times net debt to earnings before interest, taxes, depreciation, and amortization ratio. Carroll’s track record as an analyst ranks him at No. 703 among over 9,000 analysts tracked by TipRanks, with profitable ratings 63% of the time and an average return of 7.7%.
Another dividend stock worth considering is Energy Transfer (ET), a limited partnership operating in the midstream energy sector. With a dividend yield of 8%, Energy Transfer offers an attractive income opportunity for investors seeking exposure to the energy industry.
Following ET’s Q2 results, Stifel analyst Selman Akyol noted the company’s better-than-expected EBITDA and highlighted several growth prospects, particularly in the Permian to Gulf Coast value chain. Akyol’s positive outlook on natural gas, as a significant energy source for data centers, further bolsters the investment case for Energy Transfer.
Akyol pointed out that ET is well-positioned to capitalize on the growing demand from utilities, particularly in states like Texas and Florida, which present compelling growth prospects for the company. Despite potential capex increases, Akyol remains bullish on Energy Transfer’s prospects and maintains a buy rating on the stock with a price target of $19.
Ranked at No. 137 among over 9,000 analysts tracked by TipRanks, Akyol has a successful track record with profitable ratings 71% of the time and an average return of 10.3%. His endorsement of Energy Transfer underscores the stock’s potential as a lucrative dividend pick for income-focused investors in the current market environment.
In addition to EPR Properties and Energy Transfer, another dividend stock worth considering is retail giant Walmart (WMT). Following its impressive second-quarter results for fiscal 2025, Walmart raised its full-year outlook, reflecting robust performance in the first half of the year.
Walmart’s commitment to rewarding shareholders through dividends and share repurchases is evident, with the company paying over $3 billion in dividends and repurchasing shares worth $2.1 billion in the first half of fiscal 2025. Notably, Walmart’s dividend was increased by 9% earlier this year, marking the 51st consecutive year of dividend hikes for the company.
Baird analyst Peter Benedict reiterated a buy rating on Walmart and raised the price target to $82 from $70 following the Q2 results. Benedict highlighted Walmart’s market share gains amid a challenging macro environment, attributing the success to the company’s focus on value and convenience.
Furthermore, Walmart’s transformation efforts have been paying off, with a significant portion of U.S. comp growth being digitally driven. Benedict also noted the improvement in Walmart’s return on investment, driven by investments in automation and generative AI. With a strong track record of profitable ratings 71% of the time and an average return of 15.9%, Benedict’s endorsement of Walmart as a reliable dividend stock underscores the company’s strong fundamentals and growth potential.
Investors looking to build a diversified portfolio of dividend stocks should consider these top picks recommended by Wall Street analysts. With a focus on companies with solid financials, attractive dividend yields, and growth prospects, investors can position themselves for long-term success in the current market environment.