Dividend Stocks That Top Wall Street Analysts Are Upbeat About

Investors seeking a steady income stream and a diversified portfolio might find dividend-paying stocks appealing. While selecting the right stocks requires thorough research, investors can benefit from the insights of Wall Street analysts who base their recommendations on in-depth assessments of a company's financial health and its ability to consistently pay dividends. Here are three dividend-paying stocks that have been highlighted by top analysts on TipRanks, a platform that ranks analysts based on their past performance.

‍

Energy Transfer

The first stock to consider is Energy Transfer (ET), a midstream energy company that operates a vast network of pipelines and related infrastructure spanning over 130,000 miles across 44 states. As a limited partnership, Energy Transfer offers an impressive dividend yield of 7.8%, making it an attractive option for income-focused investors.

‍

Energy Transfer is scheduled to release its third-quarter earnings on November 6. Ahead of this report, Elvira Scotto, an analyst at RBC Capital, adjusted her estimates for U.S. midstream companies and raised her price target for ET from $19 to $20 while maintaining a buy rating. Scotto is optimistic about the company due to its exposure to the Permian Basin, a key area for energy production. She also believes Energy Transfer could benefit from the growing demand for data centers and artificial intelligence (AI), a factor she feels is not fully reflected in the stock price.

‍

Scotto’s revised estimates take into account Energy Transfer’s acquisition of WTG Midstream Holdings, completed in July 2024. Additionally, her estimates reflect the positive impact of Sunoco’s acquisition of NuStar Energy, as Energy Transfer owns around 21% of Sunoco's outstanding common units. Scotto is particularly bullish on Energy Transfer’s extensive asset base, which she believes positions the company to generate substantial cash flow growth. This, combined with a stronger balance sheet, should enable Energy Transfer to return more capital to its shareholders, primarily through increased distributions.

‍

Ranked 25th among over 9,100 analysts tracked by TipRanks, Scotto has a track record of successful recommendations, with 69% of her ratings proving profitable and an average return of 21.6%.

‍

Diamondback Energy

The second dividend stock to watch is Diamondback Energy (FANG), an independent oil and natural gas company focused on operations in the Permian Basin. Diamondback strengthened its business through the acquisition of Endeavor Energy. For the second quarter, the company paid a base cash dividend of 90 cents per share, alongside a variable dividend of $1.44 per share.

‍

JPMorgan analyst Arun Jayaram recently raised his price target for Diamondback stock from $182 to $205, reaffirming a buy rating. He praised the company for its successful integration of Endeavor Energy, noting that it is advancing toward its $550 million per year synergy target. Diamondback is set to announce its third-quarter results on November 4, and Jayaram believes the company could exceed expectations for its capital efficiency outlook for 2025. This outlook could serve as a catalyst for the stock’s performance.

‍

Jayaram highlighted that Diamondback’s improved guidance is likely to be driven by strong well productivity and efficiency gains achieved since the first quarter of the year. He also pointed out that Diamondback deserves a premium valuation compared to its peers, thanks to its superior capital efficiency and enhanced inventory position following the Endeavor deal. Positioned at the low end of the cost curve in the Midland Basin, Diamondback is well-placed to continue boosting its efficiency.

‍

Overall, Jayaram considers Diamondback one of the top operators in U.S. shale, with the potential to deliver modest volume growth while returning 50% of its free cash flow to shareholders each quarter. Ranked 893rd out of over 9,100 analysts on TipRanks, Jayaram’s recommendations have been successful 53% of the time, yielding an average return of 8.6%.

‍

Cisco Systems

The third dividend stock on the list is Cisco Systems (CSCO), a networking technology giant offering a dividend yield of 2.9%. Ivan Feinseth, an analyst at Tigress Financial, slightly increased his price target for Cisco from $76 to $78 while maintaining a buy rating. He expects the company to benefit from the shift toward AI-driven smart networks and the growing importance of cybersecurity, given rising enterprise spending on high-speed networks and network security.

‍

Feinseth believes Cisco’s ongoing transition from a hardware-based business model to one focused on software and subscription-based services, particularly in cloud computing and security solutions, will drive higher profit margins and more consistent recurring revenues. He also anticipates that Cisco’s recent $28 billion acquisition of Splunk will boost its AI and security software offerings, enhance its market presence, and strengthen its customer service capabilities. This acquisition is expected to support Cisco’s growth in subscription and recurring revenue, further solidifying its position in the industry.

‍

Feinseth is confident in Cisco’s ability to deliver shareholder value. The company has committed to returning 50% of its free cash flow to shareholders through dividends and stock buybacks. Impressively, Cisco has raised its dividend every year since initiating payouts in 2011, reinforcing its appeal to income investors.

‍

Ranked 185th out of over 9,100 analysts on TipRanks, Feinseth’s stock ratings have proven profitable 62% of the time, with an average return of 14%.

‍

Conclusion

For investors seeking stable income and diversification, dividend-paying stocks like Energy Transfer, Diamondback Energy, and Cisco Systems present attractive opportunities. These companies have been highlighted by top analysts for their strong financial positions, potential for growth, and commitment to returning capital to shareholders. While each stock offers unique benefits, they all provide investors with the opportunity to receive regular dividend payments while maintaining exposure to long-term growth in sectors like energy, technology, and cybersecurity.

‍