With the Federal Reserve embarking on a rate-cutting campaign, a new wave of opportunity is emerging for investors: **dividend stocks**. These stocks, known for their consistent payouts, are increasingly attractive in a lower-interest-rate environment. This article highlights three dividend-paying stocks – **Exxon Mobil (XOM)**, **Coterra Energy (CTRA)**, and **Walmart (WMT)** – recommended by leading Wall Street analysts on TipRanks, a platform renowned for its analyst ranking system based on proven track records. These selections represent a diverse range of sectors and offer compelling reasons for consideration within a broader investment strategy.
Key Takeaways: Why These Dividend Stocks Are Worth Watching
- High-Yield Dividends: Each of the highlighted stocks offers a compelling dividend yield, ranging from approximately 3% to 3.3%, exceeding many traditional savings account returns.
- Strong Financial Performance: All three companies reported strong recent quarterly results, demonstrating resilience in their respective sectors.
- Analyst Endorsements: Top-rated analysts on TipRanks have issued buy ratings and price target increases, signifying positive market sentiment and potential for appreciation.
- Consistent Dividend Growth Histories: Many of the companies boast decades-long records of increasing dividend payments, indicating financial stability and commitment to shareholder returns.
- Growth Potential Beyond Dividends: While the dividend payouts are attractive, the underlying businesses show robust growth potential, suggesting both income and capital appreciation possibilities.
Exxon Mobil (XOM): An Energy Giant’s Steady Hand
This week’s first standout is energy behemoth Exxon Mobil (XOM). The company recently announced better-than-expected third-quarter results, driven by a remarkable surge in production. In fact, Exxon Mobil achieved its highest liquids production in over 40 years, reaching 3.2 million barrels per day. This robust performance allowed the company to return a significant $9.8 billion to shareholders in Q3 alone. Furthermore, Exxon Mobil increased its quarterly dividend by 4% to 99 cents per share, extending its impressive streak of consecutive dividend increases to 42 years. The stock currently offers a forward dividend yield of 3.3%.
Analyst Insights and Strategic Moves
Following Exxon Mobil’s Q3 earnings report, Evercore analyst Stephen Richardson reiterated a buy rating on the stock, setting a price target of $135. His commentary highlighted the company’s strategic investments in major projects and acquisitions, most notably the acquisition of Pioneer Natural Resources. Richardson stated, “The benefit of incremental investments and perhaps more importantly the high grading of the asset base has put XOM on a different competitive footing vs. the industry but also vs. its own historical results.” The analyst also praised Exxon Mobil’s strong cash flow and declining net debt, underscoring the company’s financial health.
It’s noteworthy that Richardson holds a prominent position within TipRanks’ analyst ranking system, placing him among its top performers, having demonstrated profitability in his ratings a significant 61% of the time, resulting in an average return of 9.6%. His analysis suggests that Exxon Mobil is strategically positioned for continued success.
Coterra Energy (CTRA): A Permian Basin Powerhouse
Next, we consider another player in the energy sector: Coterra Energy (CTRA). This exploration and production company boasts significant operations in the Permian Basin, Marcellus Shale, and Anadarko Basin. In the third quarter, Coterra Energy directed an impressive 96% of its free cash flow (FCF) towards shareholder returns, including a quarterly base dividend of 21 cents per share and share repurchases totaling $111 million. The company is committed to returning a minimum of 50% of its annual FCF to shareholders and has already surpassed this target in the year-to-date figures, further bolstering its commitment to shareholder rewards.
Strategic Acquisitions and Analyst Outlook
Coterra Energy recently made headlines with the announcement of two significant acquisitions totaling $3.95 billion for assets in the Permian Basin. These acquisitions are expected to expand the company’s presence in New Mexico and enhance its operational capabilities. Mizuho analyst Nitin Kumar responded positively to this news, reaffirming a buy rating with a price target of $37 and designating CTRA as a “Top Pick”. Despite acknowledging that the acquired assets have slightly lower productivity than Coterra’s existing portfolio, Kumar noted “as the lowest-cost producer of gas, CTRA should be able to support above-peer cash generation even at lower prices or wide differentials, which complement oil-driven FCF from the Permian.“
Kumar’s strong track record, placing him among the top 187 analysts tracked by TipRanks, with his ratings delivering profitability in 64% of instances and an average return of 14.3%, adds further weight to this bullish outlook.
Walmart (WMT): Retail Giant’s Steady Growth
Finally, we turn our attention to retail giant Walmart (WMT). The company delivered impressive third-quarter results and boosted its full-year guidance, thanks to the strength of its e-commerce business and performance across various product categories beyond groceries. Walmart’s consistent commitment to shareholder returns is evident in its recent 9% increase in its annual dividend per share to 83 cents – marking the 51st consecutive year of dividend increases – a testament to its long-term financial stability and dedication to rewarding investors.
Positive Momentum and Analyst View
Jefferies analyst Corey Tarlowe reacted positively to Walmart’s results, raising the price target for WMT stock to $105 from $100 and reiterating a buy rating. Tarlowe highlighted robust same-store sales growth driven by increased transactions, unit volumes, and positive trends in general merchandise. He further emphasized substantial improvements in profitability margins due to factors such as enhanced e-commerce profitability, effective inventory management, and a favorable business mix.
Tarlowe’s overall sentiment is notably positive. He expressed, “I’m incrementally encouraged by WMT’s ability to offer customers improved value, witness robust growth, and gain share ahead.” His impressive standing as one of TipRanks’ top 331 analysts, with 67% profitable ratings delivering an average return of 17.6%, adds significant credence to this positive outlook.
In conclusion, these three dividend stocks, backed by strong financial performance and positive analyst endorsements, present an opportunity for investors to capitalize on the current rate environment. While individual circumstances and risk tolerances should always guide investment decisions, these selections offer a diverse range of sectors with a shared commitment to strong, and growing, returns for shareholders.
