Time to get our hands on some top dividend names. I mean dividend stocks that tick both boxes: a very high yield of over 5% and a bullish outlook from the Street. This is pretty crucial as not all dividend stocks make appealing investing propositions. Looking for those with a bullish analysis from the Street is one way to sort the wheat from the chaff.
Using TipRanks stock screener, I scanned for high-yield stocks with a ‘Strong Buy’ analyst consensus. That’s based on all the ratings the stock received over the last three months.
It’s expected that S&P 500 companies will execute some $800 billion in buybacks and return an additional $500 billion through dividends in 2019, says JP Morgan’s chief U.S. equity strategist, Dubravko Lakos-Bujas.
“A commitment to a dividend can indicate a strong business and a management priority on returning cash to shareholders, both important drivers of long-term stock appreciation” writes the firm. Great. So with this in mind, let’s take a look at five ‘Strong Buy’ dividend stocks now:
Six Flags (SIX)
With hundreds of rollercoasters and 25 parks across the U.S., Mexico and Canada, Six Flags Entertainment (NYSE:SIX) is a turnaround story that deserves a closer look.
SIX emerged from bankruptcy in April 2010, after it filed Chapter 11 in June 2009 under an unwieldy debt load and lower park attendance results.
Now however the company has a significantly de-levered balance sheet and is under new management — with proven turnaround specialist Jim Reid-Anderson at the helm.
On February 6, SIX’s board of directors declared a quarterly cash dividend of $0.82 per share ($3.28 annually). The dividend will be payable March 4, 2019.
This is on a 5.33% dividend yield, smashing the average services dividend of just 1.99%. So far the company has now recorded 9 years of dividend growth.
Notably, Wells Fargo’s Timothy Conder (Track Record & Ratings) has just upgraded Six Flags from hold to buy. He explains that the turnaround strategy and cost savings continue to generate greater than anticipated upside.
As a result Conder calls SIX’s $475-$500M 2020 Adjusted EBITDA goal achievable — while improving free cash flow supports disciplined capital allocation, further deleveraging and the potential return of capital.
Four analysts have published recent buy ratings on SIX, hence its ‘Strong Buy’ consensus. The average analyst price target of $70 for this dividend stock currently indicates 14% upside potential. Want to learn more about Six Flags? Get the free SIX Stock Research Report.
Targa Resources (TRGP)
Houston-based Targa Resources Corp (NYSE:TRGP) is a natural gas and natural gas liquids provider.
In the last month, not one, not two, but three analysts upgraded their TRGP ratings from hold to buy. As a result, this stock now has a ‘Strong Buy’ rating with a $56 price target (33% upside potential).
RBC Capital’s TJ Schultz (Track Record & Ratings) is one of the best analysts out there, with a ranking of #45 out of over 5,100 tracked analysts. He is betting on TGTP right now with a buy rating and $60 price target (42% upside potential).
“While the recent commodity price volatility may put pressure on TRGP’s gross margins in the immediate near-term, we think TRGP is still well positioned to deliver top-tier EBITDA growth thru 2020” writes Schultz.
He believes that Targa’s Permian footprint and downstream integration are among the best in the midstream space. And that this provides solid line of sight that cash flow growth goals are attainable even at current commodity prices.
As for dividends, Targa is paying out a jaw dropping 8.57% yield — which is huge, even among dividend stocks. The utilities sector average is 2.34%. This converts to a $3.64 annualized payout (paid quarterly). Get the TRGP Stock Research Report.
Blackstone Group (BX)
Blackstone Group LP (NYSE:BX) is the largest alternative investment firm in the world, with a focus on private equity, credit and hedge fund investment strategies.
The company currently boasts — wait for it — a yield of 6.9%. Compare this to the average financial services company yield of just 3.14%. This translates into an annualized payout of $2.32 paid quarterly, with a dividend growth of 6 years.
Blackstone has just released better-than-expected earnings results. Although 4Q18 was a challenging quarter for worldwide markets, the portfolios were all up for the year. This is all against a backdrop of an astonishing $113B of dry powder, despite having put $45B in the ground this year across every segment.
“We believe investors should find much to be pleased with in BX’s report today” cheers Oppenheimer’s Allison M Taylor (Track Record & Ratings). She has a $41 price target on Blackstone for 19% upside potential.
The analyst concludes: “We think investors understand that BX’s breadth and size are advantageous, but likely underappreciate that it remains a remarkable growth story. We continue to recommend the stock.”
Taylor isn’t alone. Blackstone, a ‘Strong Buy’ dividend stock, scores six back-to-back buy ratings from the Street in the last three months. So no hold or sell ratings here. Their average price target works out at $40. Get the BX Stock Research Report.
AT&T (T)
AT&T Inc. (NYSE:T) is the largest wireline and paid TV services provider in the U.S. It is also the second-largest wireless provider.
With a shockingly high dividend yield of 6.9%, T is a dividend stock that just cannot be ignored. Right now AT&T is tracking a $2.04 annualized payout, paid quarterly. That’s after dividend growth for34 years!
In comparison, the average tech stock pays a dividend of just 1.14%.
The Street is also very bullish on AT&T. “T has a solid balance sheet and an attractive dividend yield,” Oppenheimer analyst Timothy Horan (Track Record & Ratings) tells investors. He sees shares surging 39% to $41.
“We believe that combined with TWX, FCF/share could grow 6% per year” says Horan. After much legal wrangling, AT&T’s $85 billion acquisition of Time Warner closed in June.
Interestingly, the stock historically outperforms the year after it closes a major acquisition — so watch this space. Overall this ‘Strong Buy’ dividend stock has received 11 recent buy ratings from analysts, with only three analysts staying sidelined. Get the T Stock Research Report.
Enterprise Products Partners (EPD)
Last but not least comes another basic materials stock. Enterprise Products Partners L.P. (NYSE:EPD) is a huge midstream natural gas and crude oil pipeline company, with over 51,000 miles of pipelines.
With a 6.21% dividend yield, EPD is currently paying out $1.74 ever year (paid quarterly). EPD’s impressive dividend growth now spans 20 years.
On February 1, the company announced a Q4 earnings beat. EPD guided to 2019 net growth capex down 33% from 2018 and announced a $2B buyback program.
“We estimate EPD will increase FCF generation by >40% this year, which should afford EPD with additional financial flexibility to return value to unitholders through its buyback program or additional accretive projects,” cheers RBC’s TJ Schultz (Track Record & Ratings).
He calls the dividend stock ‘a core MLP holding with both offensive and defensive characteristics’ and estimates 23% upside potential from the current share price with his $34 price target.
Indeed, this is a stock with 100% Street support. In the last three months, five analysts have published EPD buy ratings. On average, they are predicting shares will surge 20% to $33. Get the EPD Stock Research Report.
