Top Wall Street analysts prefer these dividend stocks for consistent returns

CNBC

2 days ago

Earnings of major U.S. companies and the uncertainty around tariffs continued to impact investor sentiment this week. While the stock market remains volatile, investors seeking consistent returns could add some attractive dividend stocks to their portfolios.
In this regard, stock picks of top Wall Street analysts can be helpful, as the recommendations of these experts are based on in-depth analysis of a company's financials and ability to pay dividends.
Here are three dividend-paying stocks, highlighted by Wall Street's top pros, as tracked by TipRanks, a platform that ranks analysts based on their past performance.
This week's first dividend pick is Home Depot (HD). The home improvement retailer reported mixed results for the first quarter of fiscal 2025 but reaffirmed its full-year guidance. The company expressed its intention to maintain its prices and not increase them in response to tariffs.
Home Depot declared a dividend of $2.30 per share for the first quarter of 2025, payable on June 18, 2025. At an annualized dividend of $9.20 per share, HD stock offers a dividend yield of 2.5%.
Following the Q1 FY25 results, Evercore analyst Greg Melich reiterated a buy rating on HD stock with a price target of $400. The analyst thinks that the risk/reward profile of Home Depot stock is one of the best in Evercore's coverage.
Melich contends that while Home Depot's headline results appear ordinary, he believes that a notable inflection has begun. The analyst highlighted certain positives in Home Depot's Q1 performance, including stabilizing traffic, improving shrink (inventory lost due to theft or other reasons) rates, and acceleration in online sales growth to 8% after staying lower than 5% since Q3 FY22.
"HD remains a benchmark retailer, investing in technology, multichannel and stores, even while current demand remains low," concluded Melich. He continues to believe that once the macro environment improves, Home Depot could be the "next great Consumer/Retail breakout multiple stock" like Costco in 2023 and Walmart in 2024.
Melich ranks No. 607 among more than 9,500 analysts tracked by TipRanks. His ratings have been profitable 68% of the time, delivering an average return of 12%. See Home Depot Ownership Structure on TipRanks.
Next on this week's list is Diamondback Energy (FANG), an independent oil and gas company that is focused on onshore reserves, mainly in the Permian Basin in West Texas. FANG delivered better-than-expected first-quarter results. However, given the ongoing commodity price volatility, Diamondback reduced its full-year activity to maximize free cash flow generation.
Meanwhile, the company returned $864 million to shareholders in Q1 2025 through stock repurchases and a base dividend of $1.00 per share. FANG's Q1 2025 capital return represented roughly 55% of adjusted free cash flow. Based on the base and variable dividends paid over the past 12 months, FANG stock offers a dividend yield of nearly 3.9%.
In a recent research note, RBC Capital analyst Scott Hanold reaffirmed a buy rating on FANG stock with a price target of $180. Hanold noted that while the company lowered its 2025 capital budget by $400 million or 10% to $3.4 - $3.8 billion, the production outlook was cut by only 1%.
The analyst stated that Diamondback's move to reduce its capital spending plan increased his free cash flow estimate by 7% over the next 18 months. Hanold thinks that the company's decision will not weigh on its operational momentum or the ability to efficiently return to its 500 Mb/d productive capacity.
Commenting on FANG's free cash flow priorities, Hanold noted that the company is tracking ahead of its 50% minimum shareholder return target, thanks to stock buybacks amid the pullback in shares, mainly during early April. He expects the company to use the remaining free cash flow to pay down the $1.5 billion term loan related to its Double Eagle-IV acquisition in the Midland Basin, which was announced in February.
Overall, Hanold's bullish thesis on FANG stock remains intact, and he believes that "FANG has one of the lowest cost structures in the basin and a corporate cash flow break-even (including dividend) that is among the best in the industry."
Hanold ranks No. 17 among more than 9,500 analysts tracked by TipRanks. His ratings have been profitable 67% of the time, delivering an average return of 29.1%. See Diamondback Energy Insider Trading Activity on TipRanks.
Another dividend-paying energy stock in this week's list is ConocoPhillips (COP). The oil and gas exploration and production company reported market-beating earnings for the first quarter of 2025. Given a volatile macro environment, the company reduced its full-year capital and adjusted operating cost guidance but maintained its production outlook.
In Q1 2025, ConocoPhillips distributed $2.5 billion to shareholders, including $1.5 billion in share repurchases and $1.0 billion via ordinary dividends. At a quarterly dividend of $0.78 per share (annualized dividend of $3.12), COP stock offers a yield of about 3.7%.
Following investor meetings with management in Boston, Goldman Sachs analyst Neil Mehta reiterated a buy rating on COP stock with a price target of $119. Mehta highlighted that management sees significant uncertainty in oil prices in the near term due to concerns about economic growth and voluntary production cuts by OPEC+. That said, the company is bullish about long-term gas prices.
Meanwhile, the analyst expects COP's breakeven to shift lower in the times ahead, with major growth projects on track. Mehta stated that while the benchmark price of West Texas Intermediate crude oil – also known as WTI – breakeven (before dividend) is in the mid $40s in 2025, he sees the breakeven heading towards the low $30s once COP's LNG spending comes down and production at its Willow project in Alaska comes online in 2029.
Commenting on COP's shareholder returns, Mehta stated that management acknowledged that their decision not to stick with the $10 billion capital return target led to short-term volatility in COP stock. That said, COP still offers a "compelling" return, which Mehta estimates will be 8%.
Mehta ranks No. 568 among more than 9,500 analysts tracked by TipRanks. His ratings have been successful 59% of the time, delivering an average return of 8.6%. See ConocoPhillips Hedge Fund Trading Activity on TipRanks.