Top Wall Street analysts pick these dividend stocks for solid yields

September got off to a bumpy start for investors as volatility rocked markets in the first week, but dividend-paying stocks may help ease the going.

Investors with a long-term investment horizon can ignore short-term noise to focus on stocks that have the potential to enhance their portfolio’s total return through a mix of dividends and stock price appreciation.

To that end, recommendations from top Wall Street analysts can help investors pick stocks with strong fundamentals and the ability to pay consistent dividends.

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

MPLX LP

We start this week with MPLX (MPLX), a midstream energy player. The company’s quarterly cash distribution was 85 cents per common unit ($3.40 on an annualized basis) for the second quarter of 2024. MPLX offers an attractive yield of nearly 8%.

RBC Capital analyst Elvira Scotto recently reiterated a buy rating on MPLX stock with a price target of $47. The analyst updated his model to reflect the company’s strong second-quarter results, with adjusted earnings before interest, taxes, depreciation and amortization beating the Street estimate by 3 percent.

Scotto raised its adjusted EBITDA estimates for 2024 and 2025 to reflect the strong performance of the Logistics and Warehousing segment in Q2 and some consolidation of joint venture interests. The analyst maintained its estimated distribution per unit of $3.57 for 2024 and $3.84 for 2025.

Scotto continues to see MPLX as “one of the most attractive income plays among large-cap (general partnership) MLPs” due to its robust yield and growing free cash flow generation. The analyst believes MPLX’s solid free cash flow will help the company continue to grow its business and increase shareholder returns through buybacks.

The analyst also pointed out that MPLX is expanding its natural gas and natural gas liquids assets across its integrated network through organic projects, joint venture interests and bolt-on acquisitions.

Scotto is ranked #18 out of over 9,000 analysts tracked by TipRanks. Her ratings were profitable 69% of the time, delivering an average return of 20.8%. (See Trading MPLX Options on TipRanks)

The energy of chords

We’re moving to another dividend-paying energy stock, The energy of chords (CHRD). It is an independent oil and gas company operating in the Williston Basin. The company recently paid a basic dividend of $1.25 per share of common stock and a variable dividend of $1.27 per share.

On September 4, RBC Capital analyst Scott Hanold reaffirmed a buy rating on CHRD stock with a price target of $200. The analyst raised its earnings per share and cash flow per share estimates for 2024 and 2025 by nearly 3% to reflect modestly higher production and lower cash operating costs.

Hanold expects free cash flows of $1.2 billion and $1.4 billion in 2024 and 2025, respectively. The analyst anticipates FCF to increase in the second half of 2024 due to the combination of Chord Energy and Enerplus assets , which the company acquired earlier this year.

Commenting on the Enerplus integration, the analyst said: “We remain optimistic that the company is well positioned to not only meet but exceed the synergy target as operations are fully integrated.”

Additionally, the analyst expects a quarterly distribution of $4.50 to $5.00 per share in the second half of 2024, with dividends accounting for approximately 60% of distributions and buybacks accounting for 40%.

Hanold is ranked #27 out of over 9,000 analysts tracked by TipRanks. Its evaluations were successful 63% of the time, giving an average return of 25.4%. (See Chord Energy Stock Buybacks on TipRanks)

McDonald’s

This week’s third pick is the fast food chain McDonald’s (MCD). MCD shares offer a dividend yield of 2.3%. McDonald’s is a dividend aristocrat that has increased its dividend for 47 consecutive years.

On September 3, Tigress Financial analyst Ivan Feinseth reiterated a buy rating on MCD stock and raised his price target to $360 from $355. Despite a challenging backdrop, the analyst remains bullish on McDonald’s due to its ongoing technology initiatives, innovation and value focus. These factors support its resilient business model and long-term growth potential.

Feinseth noted that the company is focusing on improving its value propositions to regain its competitive edge. The analyst highlighted several recent value offers introduced by McDonald’s, including the $5 meal deal, which has helped improve its image as a fast-food chain that offers value and affordability.

Furthermore, Feinseth highlighted MCD’s competitive advantage, which is supported by its strong brand equity, loyalty program and digital initiatives. The company boasts a loyalty member base of 166 million members. It targets 250 million active loyalty members by 2027.

The analyst also noted that McDonald’s is making between $2 billion and $2.5 billion in capital investments annually to expand its store footprint and improve its technology, including by improving its automated voice ordering capabilities . Overall, Feinseth is confident in MCD’s long-term growth potential and its ability to enhance shareholder returns through dividends and share repurchases. In fact, he expects MCD to announce a dividend increase in October similar to the 10% increase announced last year.

Feinseth is ranked #210 out of over 9,000 analysts tracked by TipRanks. Its ratings were profitable 60% of the time, delivering an average return of 11.9%. (See McDonald’s Insider Trading Activity on TipRanks)