Dividend-Paying Stocks Offer Stability in Volatile Market
As the U.S. stock market faces ongoing volatility driven by factors such as earnings season and the upcoming elections, investors are seeking ways to navigate uncertainty. Dividend-paying stocks have emerged as a potential source of stability, providing consistent income streams even amid market fluctuations. These stocks, typically from established companies with strong financial positions, are known for their regular payouts to shareholders. To help investors identify attractive dividend-paying stocks, we turn to Wall Street’s top analysts who carefully analyze companies’ financial performance and future prospects. Here, we highlight three dividend stocks that have caught the attention of these analysts, offering potential for consistent returns and a smoother ride in a volatile market.
Key Takeaways:
- Dividend-paying stocks can provide steady income streams during market volatility.
- Top-ranked Wall Street analysts offer insights into companies with strong financial performance and potential for strong returns.
- Western Midstream Partners (WES), Diamondback Energy (FANG), and Coca-Cola (KO) are highlighted as three attractive dividend stocks based on analyst recommendations.
Western Midstream Partners: An Energy MLP with High Yield
Western Midstream Partners (WES) stands out with a compelling high-yield dividend and a strong performance track record. The company operates midstream assets, including pipelines and processing facilities, across Texas, New Mexico, Colorado, Utah, and Wyoming.
WES recently increased its base distribution by 52% to $0.8750 per unit, resulting in an impressive 8.8% dividend yield. This robust yield is particularly attractive given WES’s MLP (Master Limited Partnership) structure, which optimizes tax benefits.
Mizuho analyst Gabriel Moreen, who ranks highly among TipRanks analysts, has increased his price target for WES and maintained a Buy rating. Moreen highlights WES’s impressive year-to-date rally, strong Q1 results, and a positive outlook for future distribution hikes. Notably, WES’s investment-grade balance sheet, modest capital expenditure requirements, and long-term contracts provide a strong foundation for continued cash payouts.
Diamondback Energy: A Permian Basin Leader with a Strong Dividend
Diamondback Energy (FANG), another energy player, has become a dominant force in the Permian Basin, known for its prolific oil and natural gas production. FANG’s proposed acquisition of Endeavor Energy further strengthens its position in the region.
The company maintained its dividend policy, consisting of both a fixed and variable component. In Q1, FANG paid a base cash dividend of 90 cents per share and a variable cash dividend of $1.07 per share. Moreover, FANG repurchased a significant portion of its shares, demonstrating its commitment to shareholder returns.
RBC Capital analyst Scott Hanold, renowned for his expertise, has reiterated a Buy rating on FANG stock. Hanold anticipates faster cycle times and increased well completions in Q2, driving production growth. While adjusting his EPS and cash flow estimates based on commodity price realizations, Hanold expects FANG to deliver on its dividend commitments and outperform its peers.
Coca-Cola: A Global Beverage Giant with a Proven Dividend Track Record
Coca-Cola (KO), a household name synonymous with soft drinks, maintains its position as a dividend powerhouse. The company’s recent Q2 earnings exceeded expectations, reflecting robust demand for its products across multiple markets. This strong performance led to an increase in the company’s full-year organic revenue growth and earnings outlook.
Coca-Cola’s dedication to shareholder rewards is evident in its consecutive dividend increases over 62 years, recently hiking the quarterly dividend by 5.4% to 48.5 cents per share. This commitment, coupled with a dividend yield of 2.9%, positions KO as a reliable source of consistent income for investors.
RBC Capital analyst Nik Modi, known for his insightful analysis, reaffirmed a Buy rating on Coca-Cola stock. Modi highlighted the company’s better-than-expected global case volumes, particularly in growing markets like the Philippines and India. He also acknowledged the positive trend in KO’s gross margins and earnings strength. Despite potential challenges in specific markets, Modi remains optimistic about Coca-Cola’s future prospects.
Conclusion: Navigating Volatility with Dividend-Paying Stocks
While market volatility can be challenging, dividend-paying stocks can provide a stabilizing force for investors’ portfolios. The three companies highlighted here — Western Midstream Partners, Diamondback Energy, and Coca-Cola — are well-positioned to continue delivering consistent income streams and potential growth. These recommendations, based on the insights of highly regarded Wall Street analysts, offer investors a starting point for further research and potentially building a portfolio that can weather market fluctuations while generating steady returns.
