5 Enticing Dividend Stocks Primed for Long-Term Growth

Boost your passive returns with these ‘Strong Buy’ dividend stocks

The 9 Best Stocks to Buy for the Next DecadeThe 9 Best Stocks to Buy for the Next Decade

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There is no shortage of dividend stock lists out there. But what sets a good dividend stock apart isn’t simply the dividend payment. If you are going to invest in a dividend stock it should be a worthy investing proposition, period. With or without the dividend. This means that the business is going on the right track, and the valuation looks appealing.

Most crucially, these stocks need to achieve the right balance between dividend payment and the re-investment of profits. This ensures that the dividend is sustainable from a long-term perspective.

Here I used TipRanks’ new stock screener to source five top-rated dividend stocks. All five of these stocks score have a “Strong Buy” consensus rating from the Street’s top analysts. And that’s not all. These stocks are also perfectly primed for long-term gains- making them a win-win prospect.

Let’s take a closer look now:

Dividend Stocks Primed for Long-Term Gains:

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General Motors (GM)

Uncertainty creates opportunity as the famous saying goes. And that is certainly true when it comes to General Motors Company (NYSE:GM). True GM stock has not had the best success as of late. But it is still a killer dividend stock with a promising long-term opportunity.

First, from a dividend perspective GM offers up a sweet dividend yield of 4.07%. This is versus the sector average of 2.02%. At the moment, this translates into an annual payout of $1.52.

Top RBC Capital analyst Joseph Spak (Profile & Recommendations) recently reiterated his GM Buy rating with a $49 price target (36% upside potential). Despite a lowered 2018 outlook, Spak believes GM is executing well in a difficult environment.

“We believe the bar has been reset and are encouraged by GM’s strong action to strengthen the core. We also remain hopeful on the Cruise opportunity,” states this top analyst. Indeed Cruise is GM’s self-driving unit and the recipient of a massive $2.25 billion by Japan’s giant SoftBank fund.

But a narrative shift is needed for prices to rise. “We think it could go: more trade clarity, pickup launch, Softbank tranche 2, Cruise commercialization,” concludes Spak.

Overall this ‘Strong Buy’ stock scores 10 buy ratings in the last three months. This is versus just 1 hold rating. Meanwhile the $51 average analyst price target indicates 38% upside potential lies ahead. See what other Top Analysts are saying about GM.

Dividend Stocks Primed for Long-Term Gains:

Valero Energy (VLO)

Texas-based Valero Energy Corporation (NYSE:VLO) is the world’s largest independent refiner. In terms of stats, VLO has 14 refineries across the U.S., Canada and U.K., with total crude throughput capacity of 2.4 million barrels/ day. It is also something of a cash-return machine.

“VLO has a very strong program to return capital to shareholders, with $8+ billion returned in 2015–17” writes acclaimed RBC Capital analyst Brad Heffern (Profile & Recommendations). And the signs are that this shareholder program is going to continue to pay out impressively. The company recently reiterated its shareholder return policy with a targeted annual payout ratio of 40–50%.

According to Valero, the policy allows for the right balance of shareholder returns and cash to invest back into the company. However Heffern is even more optimistic. He writes: “We continue to think VLO’s business supports a higher ratio of 60% or so but expect the company to leave the range unchanged while regularly beating it.”

Indeed, the company’s dividend yield comes in at 2.66% — notably higher than the sector average of 2.31%. This follows through into an annual dividend payout of $3.20, paid quarterly. And from the Street this ‘Strong Buy’ stock has received only buy ratings in the last three months. This is with an average analyst price target of $134 (13% upside potential). See what other Top Analysts are saying about VLO.

Dividend Stocks Primed for Long-Term Gains:

Restaurant Brands International (QSR)

Restaurant Brands International Inc. (NYSE:QSR) is one of the largest quick-service restaurants in the world. Alongside the Burger King, QSR also owns Tim Hortons and Popeye’s Louisiana Kitchen brands. Franchisees own and operate nearly 100% of the system.

Investors reap a lucrative 3.07% yield versus the sector average of just 1.94%. This is with a $1.80 annual dividend payment, paid quarterly.

And now is the perfect time to get a piece of the action. “QSR looks extremely undervalued for its best-in-class growth and major cash optionality—a material upside driver that Street does not model,” cheers top Oppenheimer analyst Brian Bittner (Profile & Recommendations). Plus its system-wide sales algorithm is high-singles and only lags DPZ.

He reiterated his QSR Buy rating on August 24 with a $75 price target (28% upside potential). Overall, this Strong Buy stock has 100% support from the Street with now. This is with 6 consecutive recent Buy ratings. From current levels, analysts are estimating (on average) that prices can spike 22%. See what other Top Analysts are saying about QSR.

Dividend Stocks Primed for Long-Term Gains:

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Gilead Sciences (GILD)

This classical dividend heavy-hitter is a top biopharma pick. Gilead Sciences, Inc. (NASDAQ:GILD) rewards its investors with an impressive 3.04% dividend yield. And these investors can expect an annual payout of $2.28 (paid quarterly).

Gilead has seen prices almost halve over the last couple of years due to declining revenues from its flagship hepatitis C virus (HCV) drugs. However, shares are rising — and GILD is now up over 10% in the last three months. In fact, the stock has a Strong Buy consensus rating from the Street — with predicted upside potential of 20% from the current share price.

In particular, highly-ranked RBC Capital analyst Brian Abrahams (Profile & Recommendations) just reiterated his Buy rating with a bullish $90 price target (20% upside) on August 29. He sees shares surging after a new CEO is announced, writing:

“We believe GILD is well-positioned long term, and expect strong commercial execution coupled with progress from its underappreciated pipeline to drive appreciation, especially once the senior leadership team is re-established.” See what other Top Analysts are saying about GILD.

Dividend Stocks Primed for Long-Term Gains:

Energy Transfer Equity (ETE)

This oil and gas pipeline operator is a true high-yield stock. With a 6.88% yield, Energy Transfer Equity, L.P. (NYSE:ETE) easily crushes the sector average of 2.31%. On an annual basis, ETE pays out $1.22 split into quarterly payments.

Right now the stock is in a degree of flux — but the end result will be beneficial to shareholders and the company alike. On 1 August, Energy Transfer Equity announced plans to merge with Energy Transfer Partners, L.P. (NYSE:ETP). In a bid to simplify their legal structure, ETE and ETP will effectively merge into one.

Luckily the Street is applauding the move. “We are positive on the announced ETE-ETP merger, and expect the surviving entity to continue to benefit from growing crude oil production in the United States given its well positioned asset base,” explains five-star RBC Capital analyst Elvira Scotto (Profile & Recommendations). She believes the pro-forma entity will have a better cost of capital and the ability to self-fund growth capex.

Scotto ramped her price target to $23 following strong 2Q18 results that ‘handily exceeded our and consensus expectations’. Indeed this ‘Strong Buy’ stock has only received buy ratings in the last three months. These 6 analysts have an average price target on the stock of $22. Given the stock is now trading at $17.74, this translates into 25% upside. See what other Top Analysts are saying about ETE.

TipRanks.com offers exclusive insights for investors by focusing on the moves of experts: Analysts, Insiders, Bloggers, Hedge Fund Managers and more. See what the experts are saying about your stocks now at TipRanks.com. As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2018/08/5-enticing-dividend-stocks-also-primed-for-long-term-gains/.

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