Eric Greager, President and CEO of Civitas Resources, at the NYSE, November 9, 2021.
Source: NYSE
As investors confront uncertain markets in the short term, dividend paying stocks could offer some portfolio stability and income.
Analysts have dug into the details on dividend-paying stocks, analyzing companies' fundamentals and understanding their long-term growth potential.
With that in mind, here are three attractive dividend stocks, according to Wall Street's top experts on TipRanks, a platform that ranks analysts based on their past performance.
Civitas Resources
First, there is independent oil and natural gas producer Civitas Resources (CIVI). The company is focused on developing assets in the Permian and Denver-Julesburg basins.
Civitas paid a quarterly dividend of $1.59 per share on December 29, 2023. This payment included a base dividend of $0.50 per share and a variable dividend of $1.09 per share.
Earlier this month, Mizuho analyst Nitin Kumar upgraded Civitas stock to buy from hold with a price target of $86 per share. The analyst called the stock one of his top picks in the U.S. oil and gas space. The analyst thinks that 2023 was a transformative year for the company, with three major acquisitions in the Permian Basin reshaping its asset base.
Kumar added that these recent acquisitions extended the duration of the company's overall inventory to nearly 10 years, making it more competitive than its small and mid-cap exploration and production rivals. He also highlighted that the CIVI offers the highest cash returns compared to its peers.
Despite these positives, the stock still trades at a major discount to its peers on FCF/EV and EV/EBITDAX (earnings before interest, taxes, depreciation or depletion, amortization, and exploration expense) basis.
"We think this relative valuation gap is too wide considering the vastly improved asset base and expanded inventory duration," said Kumar.
Kumar ranks No. 224 among more than 8,600 analysts tracked by TipRanks. His ratings have been profitable 60% of the time, with each delivering an average return of 15.5%. (See Civitas Insider Trading Activity on TipRanks)
Williams Companies
We move to another energy dividend stock – Williams Companies (WMB). The energy infrastructure company handles about one-third of the natural gas shipped in the U.S.
On Dec. 26, 2023, the company paid a quarterly dividend of $0.4475 per share. This dividend marked a 5.3% year-over-year growth. WMB offers a dividend yield of 5.1%.
Williams recently acquired a portfolio of natural gas storage assets from Hartree Partners LP's affiliate for $1.95 billion. Stifel analyst Selman Akyol expects this acquisition, which includes six natural gas facilities, to be favorable, given the acquired assets' access to LNG export facilities.
The analyst thinks that the deal will enhance the company's storage to cater to the growing LNG demand. Additionally, the analyst noted that this acquisition would place the company in a better position to provide fuel for standby power plants amid the transition to renewables.
Akyol reiterated a buy rating on WMB stock with a price target of $40, saying, "With a diversified gathering footprint and the largest U.S. long-haul natural gas pipeline in Transco, Williams' footprint should remain insulated from commodity price swings with over 90% fee-based margins."
The analyst also highlighted the company's top-tier distribution coverage, investment grade balance sheet, attractive yield and the ability to generate stable cash flows despite macro challenges.
Akyol holds the 976th position among more than 8,600 analysts on TipRanks. His ratings have been successful 63% of the time, delivering a return of 4.2%, on average. (See Williams' Financial Statements on TipRanks.
Kimco Realty
Finally, we look at Kimco Realty (KIM), a real estate investment trust (REIT) that is focused on grocery-anchored shopping centers. In December 2023, the company paid a quarterly cash dividend of $0.24 per share, which reflected a 4.3% increase over the prior dividend payment. KIM's dividend yield stands at 4.7%.
Following Kimco Realty's recently completed acquisition of RPT Realty, Stifel analyst Simon Yarmak reaffirmed a buy rating on KIM stock and slightly increased the price target to $23 per share from $21.75 per share. The analyst noted that management is optimistic about an upside to occupancy levels in RPT's portfolio, margins, and a solid signed-not-opened (SNO) portfolio.
The analyst added that management is positive about the financial health of the company's tenants and thinks that its exposure to Rite Aid, which filed for bankruptcy in 2023, remains "very muted."
Yarmak remains bullish on Kimco Realty and thinks that the company's portfolio is stable and has significant size and scale in its target markets. He raised his 2024 FFO (funds from operations) per share estimate to $1.62 from $1.61 and 2025 estimate to $1.69 from $1.68. The analyst expects 2023 FFO of $1.57 per share.
"KIM is focused on executing on the value creation opportunities within its portfolio to drive NOI [net operating income] and cash flow growth," said Yarmak, explaining his investment stance.
Yarmak ranks No. 410 among more than 8,600 analysts tracked by TipRanks. His ratings have been profitable 58% of the time, with each delivering an average return of 9.7%. (See Kimco Realty Technical Analysis on TipRanks)
