Under the bright lights of a bustling Walmart Supercenter during its multi-week Annual Deals Shopping Event in Burbank, California, folks were busy snagging holiday bargains on November 21, 2024. (Photo credit: Allen J. Schaben | Los Angeles Times | Getty Images)
Diversifying your investment portfolio with a mix of growth and dividend stocks could be a savvy move. This strategy not only provides the opportunity for capital growth but also ensures a steady stream of income through dividends.
With the Federal Reserve recently trimming interest rates by an additional 25 basis points, there’s been a noticeable shift in investor interest toward dividend stocks. Such stocks tend to shine brighter in a low-interest-rate environment. For those looking to invest wisely, keeping an eye on top Wall Street analysts’ picks could lead you to dependable dividend stocks with robust fundamentals.
Now, let’s dive into three dividend-paying stocks that come highly recommended by Wall Street experts, with insights from TipRanks—a platform that evaluates analysts based on their historical performance.
### Walmart
Our first stop this week is the retail giant Walmart (WMT), which boasts an impressive track record of increasing its dividend for 51 years straight. The company recently reported third-quarter results that exceeded expectations and bolstered hopes by upping its full-year outlook. Currently, the stock offers a dividend yield of 0.9%.
Ivan Feinseth from Tigress Financial recently reaffirmed a buy rating on Walmart’s stock, upping his price target from $86 to $115. The analyst pointed out Walmart’s strides in gaining market share in the United States, particularly in groceries and general merchandise, with a notable uptick among affluent shoppers.
Feinseth highlighted Walmart’s strategic embrace of generative artificial intelligence and machine learning to refine the shopping experience both online and in physical stores. Notably, the company is testing a generative AI shopping assistant that’s designed to assist customers by aligning product recommendations with their individual preferences.
Further, Feinseth emphasized Walmart’s focus on technology and automation to enhance operational efficiency, streamline supply chains, and ultimately, boost profitability. He also mentioned the retailer’s strong e-commerce growth, brand equity, increasing Walmart+ memberships, and burgeoning advertising business as key strengths.
With sustained dividend hikes and a robust share buyback strategy, Feinseth sees potential for further stock appreciation. He is ranked 190th among over 9,200 analysts tracked by TipRanks, with a 62% success rate and an average return of 14.4%.
### Gaming and Leisure Properties
Next on our list is Gaming and Leisure Properties (GLPI), a real estate investment trust (REIT) that leases properties to gaming operators. These leases, known as triple-net leases, transfer property-related expenses like maintenance and insurance to the tenants. GLPI announced a fourth-quarter dividend of 76 cents per share, reflecting a 4.1% annual increase and offering a pretty attractive yield of 6.5%.
Brad Heffern from RBC Capital maintains a buy rating on GLPI stock with a $57 price target. He highlights GLPI as part of RBC’s “Top 30 Global Ideas” list, buoyed by an investment pipeline exceeding $2 billion. Given that these deals were struck at higher rates, a drop in interest rates could make gaming cap rates steadier than those in other net lease categories, thus sustaining wider spreads.
In a strategic move, GLPI has ventured into the potentially lucrative tribal gaming space by providing a $110 million term loan for a new casino venture near Sacramento. This could act as a future catalyst for stock growth.
Heffern also underscored GLPI’s robust balance sheet, potential for a credit rating upgrade, and compelling valuation due to its high-quality cash flows. Heffern holds the 815th position among over 9,200 analysts on TipRanks, with a 47% success rate and an average return of 9.7%.
### Ares Management
Our final spotlight is on Ares Management (ARES), an alternative investment powerhouse engaged across various asset classes, including real estate, credit, private equity, and infrastructure. The company declared a quarterly dividend of 93 cents for its Class A stock, offering a dividend yield of 2.1%.
In a broader report on U.S. asset managers, RBC Capital’s Kenneth Lee not only reaffirmed a buy rating for ARES but also increased his price target from $185 to $205. As we look to 2025, Lee cites ARES as his “favorite” within the asset manager category in the U.S., largely due to its lead in the private credit sector.
Lee foresees Ares benefiting from favorable trends in private wealth and global infrastructure markets. The prospect of improved macroeconomic conditions and potential corporate tax reductions under the new administration adds to his optimism for Ares and other asset managers.
Lee also notes ARES’s strong fundraising capabilities and its asset-light model with high return-on-equity, supporting his bullish stance on the stock. On TipRanks, Lee is ranked 19th out of more than 9,200 analysts, boasting a 73% success rate with an average return of 18.8%.
