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CNBC
3 days ago
- Business
- CNBC
Top Wall Street analysts prefer these dividend stocks for consistent returns
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.
Yahoo
08-04-2025
- Business
- Yahoo
Trump tariffs pose significant profit risk to Walmart
While the market may be in the mood to bounce higher on Tuesday after a brutal three-day stretch, Wall Street is still very much trying to assess the potential tariff impact on corporate America's bottom lines. For retail behemoth Walmart (WMT), early calculations from Evercore ISI retail analyst Greg Melich suggest severe profit risk that investors may be overlooking. "If 50% incremental [tariffs] on China and 20% rest of the world [tariffs] is maintained, AND no carrots of tax cuts or deregulation are implemented, we estimate the EPS pressure for Walmart of 2% could grow 3x higher," Melich warned in a note on Tuesday. Melich estimates that Walmart imports about $105 billion worth of merchandise. That merchandise is now at risk of being slapped with Trump tariffs. Read more: What Trump's tariffs mean for the economy and your wallet President Trump uncorked a baseline tariff rate of 10% that went into effect on Apr. 5. A higher tariff rate will start on April 9 for about 60 countries that the administration considers to be the worst trade offenders. Some of those nations are important sourcing and business regions for large US retailers like Walmart and rival Target (TGT) and vendors in Levi's (LEVI). China, for example, will see reciprocal tariffs of 34%. Vietnam clocks in at 46%. The reciprocal tariffs are on top of existing duties, such as the 20% Trump imposed on China earlier, bringing the total rate on the country to 54%. China has retaliated with a 34% tariff on American goods. Trump fired back on Monday, threatening an additional 50% tariff on China if the country doesn't remove its US tariffs. Walmart's often defensive shares have been put through the wringer — the stock has dropped 8% since Trump's tariff plan was revealed. The stock's forward price-to-earnings multiple has compressed from 36 to 31 since the start of the year, according to Yahoo Finance data. The tariff concerns don't stop there for Walmart. "Given that the situation is fluid and unprecedented, the impacts are uncertain," Levi's (LEVI) longtime CFO Harmit Singh said on a late Monday earnings call. "We are in the process of scenario planning and determining different mitigation strategies. We recognize this is a quickly evolving macro situation and we have to see where the dust settles to give you the guidance that is going to be as helpful to you as possible." The wildcard now is how US consumers respond to what looks like inevitable price increases on everything from car parts to jeans. Ahead of the tariffs in March, Walmart already had called out weakening consumer sentiment amid the start of price hikes. Walmart said it was seeing sentiment "decline" broadly across income cohorts, regions, and political affiliations. Moreover, some competitors had raised prices on food due to tariff worries — Walmart didn't. That had resulted in wider price gaps in food compared to rivals, according to Citi analyst Paul Lejuez. A "handful" of competitors took a 15% price increase on avocados, which are largely sourced from Mexico. The concerns on the state of the consumer have many on Wall Street saying the US will be in a recession this year. BCA Research's veteran strategist Peter Berezin told me he sees a 75% chance of a recession within the next three months. "Conventional estimates understate the likely impact on economic activity from the trade war and DOGE cuts. This implies that growth will slow more than expected," Berezin said on Yahoo Finance's Opening Bid podcast (listen below). Berezin didn't rule out the US currently being in a recession. Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email Click here for all of the latest retail stock news and events to better inform your investing strategy
Yahoo
04-04-2025
- Automotive
- Yahoo
Wall Street hunts for cheap tariff-proof stocks after the carnage
It takes ice water running through your veins to pick stocks to buy at the moment. But that is where we find a few brave souls on Wall Street following the "Liberation Day" massacre taking place in markets. By the close of trading on Thursday, the damage was apparent as investors adjusted for possibly sharply lower economic and corporate earnings growth at the hands of bruising Trump tariffs. The S&P 500 (^GSPC) closed Thursday down 4.8%, the Dow Jones Industrial Average (^DJI) dropped 4%, and the Nasdaq Composite (^IXIC) shed 6%. Stocks of companies that are global in nature cratered. Nike (NKE) plunged 14%, while Apple (AAPL) and Amazon (AMZN) sank 9%, and Walmart (WMT) fell 3%. Markets braced for another day of heavy selling on Friday. At the time of this writing, Dow Jones Industrial Average futures were sinking 1,200 points. Read more about the global market sell-off and today's market action. Yahoo Finance scoured the Wall Street community's avalanche of research notes from the past 48 hours to see if anyone dared say something bullish about a stock right now. Although bullishness was hard to find, there were a few daredevils on the Street calling out top picks. The reasons for these top picks ranged from relatively tariff-proof business models to a view the stock had become too cheap, even assuming worst-case scenarios for the global economy. The fact we didn't find more top picks should be telling. Pick: Genuine Parts Company (GPC) Other Wall Street Insights on Yahoo Finance "Auto parts stand out at the top of the list as being relatively well positioned to pass through higher input costs brought about from tariffs," Melich wrote in a note on Friday. Melich upgraded his rating on auto parts play Genuine Parts Company to Outperform from In-Line. Explained Melich, "We view GPC as one of the better insulated companies in our coverage from a tariff perspective, with the ability to pass through rising prices in both its auto and industrial segments, there is even a possibility that earnings may move higher from tariffs. While we are currently below the Street, with the stock trading at about 14x depressed 2026 EPS and end markets largely depressed, we believe that much of the risk associated with a choppy low-income consumer and tariffs is baked in." Picks: Microsoft (MSFT), Salesforce (CRM), Intuit (INTU), Workday (WDAY), Adobe (ADBE) Other Wall Street Insights on Yahoo Finance Materne hedges his picks a bit, acknowledging the broader market backdrop is rife with risk. "Let's be clear — there is no precedent for what's going on in the markets/economy today, but the last time the macro created a cascade of negative revenue estimate revisions in software was in 2022. And unless things change on the policy front, top line estimates are likely at risk and this pullback is clearly more serious than some of the 'garden variety' hits to software in 2023 and 2024," Materne said. He added, "While there are no 'safe havens' in this kind of tape and the entire sector is likely to get de-rated as long as demand is in question, we believe companies that are already back to their 2022 trough multiple on enterprise value/free cash flow or price-to-earnings are probably a bit safer (on a relative basis). That would include: Microsoft, Salesforce, Intuit, Workday, and Adobe." Read more: How to protect your money during economic turmoil, stock market volatility Pick: O'Reilly Automotive (ORLY) Other Wall Street Insights on Yahoo Finance Shemesh joins Evercore ISI's Melich in using the pullback in an auto parts seller to issue an upgrade on the stock. The drivers of Shemesh's upgrade jibe with Melich's. "We estimate that about 50% of O'Reilly's cost of goods sold is sourced internationally, which is likely to result in incremental cost of about 9%. That being said, we estimate that about 85% of ORLY products fall in the required maintenance/parts bucket, which provides the company pricing power. We note that ORLY is lapping over a reinvestment year and should benefit from new car inflation keeping consumers in current vehicles longer," Shemesh explained. "Our $1,503 price target is based on 30x (~29x prior) our 2026 EPS estimate of $50.11 (about 1% ahead of consensus estimates for $50.11). Our implied multiple represents peak multiple for the name, which we think is justified given relative attractiveness. While our revised price target represents limited absolute upside, the name should be a relative out-performer," he added. Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email
