Top Wall Street analysts prefer these dividend stocks to bolster portfolios

The Federal Reserve recently cut interest rates by 50 basis points, creating a favorable backdrop for dividend-paying stocks.

Wall Street analyst recommendations and in-depth analysis can help investors select dividend stocks that can enhance total passive income returns and stock price appreciation.

Here are three dividend stocks highlighted by top Wall Street pros on TipRanks, a platform that ranks analysts based on their past performance.

Nordic Oil and Gas

This week’s first dividend act is Nordic Oil and Gas (WALNUT), an untapped, upstream owner of energy assets. It acquires minority interests in assets in several basins operated by leading operators.

In August, NOG announced a dividend of 42 cents per share, payable on October 31. This dividend marked an 11% year-over-year increase. NOG offers a dividend yield of 4.8%.

Mizuho analyst William Janela recently initiated a buy rating on NOG stock with a price target of $47. He believes that the combination of NOG’s expanded scale, diversification and a growing shift towards co-acquisition transactions has “created a unique business model, retaining the benefits of the non-operator while mitigating some of the typical disadvantages”.

Janela also highlighted other advantages, such as higher cash operating margins and a strong M&A track record, that make NOG a compelling investment. He pointed out that the company offers attractive cash returns through its above-average core dividend yield and growing share buybacks.

Coming to the debate over whether NOG’s non-operator business is attractive compared to operator exploration and production, Janela argues that NOG’s differentiated scale and diversification across major US basins and operators gives it capital flexibility. Such flexibility supports NOG’s active investment approach, challenging the historical view that non-operators are passive investors/vehicles.

Janela ranks #567 out of over 9,000 analysts tracked by TipRanks. Its ratings were profitable 53% of the time, delivering an average return of 22.6%. (See NOG Property Structure on TipRanks)

Darden Restaurants

The next dividend stock is Darden Restaurants (DRI). The company recently announced lower-than-expected results for the first quarter of fiscal 2025. However, shares rose after the results as the company maintained its full-year guidance and announced its partnership with Uber.

Turning to shareholder returns, Darden repurchased approximately 1.2 million shares for $172 million in Q1 FY25 and paid out $166 million in dividends. With a quarterly dividend of $1.40 per share ($5.60 annualized dividend), DRI stock offers a dividend yield of 3.3%.

Following print, BTIG analyst Peter Saleh reaffirmed a buy rating on DRI stock. He raised his price target to $195 from $175, citing several sales factors — including increased promotions, price advertising and the Uber Eats partnership — that are expected to significantly boost same-store sales at the company’s Olive Garden chain .

The Uber Eats partnership will begin this fall with a pilot for delivery at approximately 100 Olive Garden locations. Saleh expects the Uber Eats partnership to generate a comparable single-digit sales benefit over time. The analyst noted that while Q1 FY25 performance was affected by unexpected industry weakness in July, the company’s comparable sales growth turned positive for all brands except Fine Dining in September.

Overall, Saleh remains bullish on DRI stock, calling it a “combination of an industry-leading operator with consistent earnings growth at an attractive valuation.”

Saleh ranks #422 out of over 9,000 analysts tracked by TipRanks. Its ratings were profitable 62% of the time, delivering an average return of 10.7%. (See DRI Stock Buybacks on TipRanks)

Aim

Big box retailer Aim (TGT) is this week’s third dividend pick. In June, Target announced a 1.8% increase in its quarterly dividend to $1.12 per share. This marked the 53rd consecutive year that the company has increased its dividend. TGT shares offer a dividend yield of 2.9%.

Last month, Target announced better-than-expected results for the second quarter of fiscal 2024 amid macroeconomic challenges. The company paid out $509 million in dividends and repurchased $155 million worth of stock in the fiscal second quarter.

Target recently announced the appointment of Jim Lee as the company’s new CFO. Following the news, Jefferies analyst Corey Tarlowe reaffirmed a buy rating on TGT stock, with a $195 price target. The analyst is bullish on the new CFO hire and believes he could enhance the company’s focus on food and beverages given his experience at consumer staples giant PepsiCo.

Tarlowe noted the company’s comment during the Q2 earnings call about food and beverage being a traffic category. He added that the company’s price cut on nearly 5,000 items over the summer fueled higher unit and dollar sales. With the appointment of Lee as the new CFO, the analyst sees the opportunity for further price cuts and increased volumes. TGT’s margins are also expected to improve under Lee.

Despite the short-term pressures, Tarlowe is optimistic about TGT’s long-term prospects. He pointed out that the company’s “significant investments in pricing, omnichannel and stores are delivering solid returns and share gains.”

Tarlowe is ranked #319 out of over 9,000 analysts tracked by TipRanks. Its ratings were profitable 67% of the time, delivering an average return of 17.1%. (See TGT stock charts on TipRanks)