Top Wall Street analysts pick these dividend stocks for enhanced returns

The Coca-Cola Company logo is being displayed at a New Year’s fair in Kyiv, Ukraine, on December 31, 2023.

STR | Nurphoto | Getty Images

Investors looking to enhance their portfolio returns can opt for a combination of growth and dividend stocks.

Choosing the right dividend stock by analyzing multiple factors can be complex for investors. However, recommendations from analysts can help inform investors’ research and guide them toward lucrative dividend stocks from companies with strong fundamentals.

Here are three attractive dividend stocks, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.

Coca-Cola

This week’s first dividend pick is beverage giant Coca-Cola (KO). Earlier this month, the company reported fourth-quarter revenue that surpassed expectations and earnings that were in line with analysts’ estimates. Higher prices helped Coca-Cola offset the weakness in North American volumes.

Coca-Cola paid $8 billion in dividends in 2023 and made net share repurchases worth $1.7 billion. The company, recently announced a nearly 5.4% increase in its quarterly dividend per share to $0.485. This increase marked the 62nd consecutive year of dividend hikes for the company. With an annual dividend of $1.94 per share, KO stock offers a yield of more than 3%.

Following the Q4 2023 results, RBC Capital analyst Nik Modi reiterated a buy rating on Coca-Cola stock with a price target of $65. The analyst noted that KO’s organic revenue growth was fueled by the impressive rise in pricing and resilient volumes, with the company exceeding the organic growth expectations for five out of six segments.

While higher marketing investments and a strong dollar weighed on Coca-Cola’s earnings, the analyst expects the company’s fundamentals to remain robust this year.

“We believe the company’s latest restructuring and organizational design changes will facilitate better allocation of resources, which will ultimately lead to better share gains and white space expansion,” said Modi.   

Modi ranks No. 615 among more than 8,700 analysts tracked by TipRanks. His ratings have been profitable 60% of the time, with each delivering an average return of 6.3%. (See Coca-Cola Insider Trading Activity on TipRanks) 

Blue Owl Capital

Next up is Blue Owl Capital (OWL), an asset manager with assets under management of more than $165 billion as of Dec. 31, 2023. On Feb. 9, the company announced its quarterly results and declared a dividend of 14 cents a share, payable on March 5. The company also announced about a 29% hike in its annual dividend for 2024 to 72 cents per share (18 cents a share per quarter). Blue Owl has a dividend yield of 3.1%.

In reaction to the print, Deutsche Bank analyst Brian Bedell reaffirmed a buy rating on OWL stock and increased the price target to $20 from $17. The analyst thinks that the company’s fourth-quarter results were “very good,” with a strong revenue beat, driven by improved management fees and higher-than-expected transaction fees.

Following the 25% growth in fee-related earnings, or FRE, in 2023, the analyst thinks the company is well-positioned to deliver at least a 25% FRE increase this year as well. The analyst highlighted management’s commentary about reaching the dividend goal of $1 per share by 2025, with a line of sight into generating an additional $1 billion in revenue.

“Most importantly, after raising the dividend by 29% to $0.72 p.s. [per share] for 2024, mgmt portrayed high visibility into generating stronger earnings power to support a dividend near $1.00 p.s. in 2025 (we model $0.91),” said Bedell.

Bedell holds the 593rd position among more than 8,700 analysts tracked by TipRanks. His ratings have been profitable 54% of the time, with each delivering an average return of 8.5%. (See Blue Owl Hedge Fund Activity on TipRanks)

Chevron

Oil and gas giant Chevron’s (CVX) earnings declined last year due to lower oil prices compared to the elevated levels seen in 2022. Nonetheless, the company impressed investors with significant shareholder returns of $26.3 billion. This amount included about $14.9 billion in share buybacks and $11.3 billion in dividends.

Further, Chevron, a dividend aristocrat, announced an 8% rise in its quarterly dividend to $1.63 per share, payable on March 11. The stock has a yield of 4.2%.  

Noting Chevron’s Q4 beat on adjusted earnings per share, Goldman Sachs analyst Neil Mehta reiterated a buy rating on the stock with a price target of $180. The analyst highlighted management’s constructive update on the Tengizchevroil, or TCO, expansion project in Kazakhstan.

While share repurchases in the first quarter of 2024 could be limited due to the ongoing Hess deal, Mehta remains bullish about Chevron’s “leading capital returns profile, where we expect CVX to return ~$29.3 bn in 2024/2025, representing ~10% yield vs US Major peer average of ~8%.”

Aside from Chevron’s attractive capital returns profile, Mehta is also optimistic about the company’s 2025 upstream volume and cash flow inflection as the TCO project ramps.

Mehta ranks No. 351 among more than 8,700 analysts tracked by TipRanks. His ratings have been successful 62% of the time, with each delivering an average return of 10.7%. (See Chevron Financials on TipRanks)

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