The Federal Reserve is anticipated to cut interest rates in September, which means that dividend-paying stocks could be poised to outperform other income-generating assets like bonds. These stocks are likely to become more attractive due to higher dividend yields. With an abundance of companies offering dividends, investors may face challenges in selecting the best stocks. In such cases, considering recommendations from top analysts can be advantageous when choosing attractive dividend stocks with solid financials.
EPR Properties, a real estate investment trust, focuses on experiential properties such as movie theaters, amusement parks, and ski resorts. The company offers an impressive dividend yield of 7.3%. RBC Capital analyst Michael Carroll recently upgraded his rating for EPR to buy from hold and raised the price target to $50 from $48. Carroll remains optimistic about EPR’s ability to deliver favorable results amidst challenging operating conditions, such as the Covid-19 pandemic and actors/writers strikes. He believes that EPR is poised for growth as these obstacles diminish.
Carroll emphasized that the theatrical box office is expected to accelerate in the second half of 2024 and 2025, leading to higher percentage rents and a stronger tenant base for EPR. Despite concerns about EPR’s significant exposure to theaters, management is actively working to reduce this over time. Moreover, there are signs of improvement regarding AMC, one of the company’s key tenants, as the company takes steps like capital raises and debt refinancing. Carroll points out that EPR’s high dividend yield is well-protected by a 70% adjusted funds from operations payout ratio and a solid balance sheet with a 5.2-times net debt to earnings before interest, taxes, depreciation, and amortization ratio.
Energy Transfer, a limited partnership in the midstream energy sector, offers a dividend yield of 8%. Following its Q2 results, Stifel analyst Selman Akyol praised the company for reporting better-than-expected EBITDA and outlining growth opportunities. Akyol highlighted the positive outlook for natural gas as it is expected to meet the energy demands of artificial intelligence data centers. He believes that Energy Transfer’s robust footprint can provide the necessary natural gas to sustain data centers’ power requirements.
Akyol also mentioned that Energy Transfer is benefiting from increased demand from utilities, particularly in Texas and Florida, where there is significant potential for growth due to the presence of data centers and a growing population. Despite potential rising capex, Akyol expresses confidence in Energy Transfer’s positioning and reiterates a buy rating on the stock with a price target of $19.
Walmart recently impressed investors with strong results in the second quarter of fiscal 2025, leading to an increased full-year outlook. The company continues to reward shareholders through dividends and share repurchases, totaling over $5 billion in the first half of the fiscal year. Walmart raised its dividend by 9% earlier in the year, marking the 51st consecutive year of dividend hikes.
Baird analyst Peter Benedict reiterated a buy rating on Walmart after its Q2 results and raised the price target to $82. Benedict highlighted that Walmart’s market share increased despite economic challenges, thanks to its focus on value and convenience. He pointed out that Walmart’s transformation efforts are paying off, with a significant portion of U.S. comp growth being driven digitally. The retailer’s trailing 12-month return on investment also improved due to investments in automation and AI.
Dividend-paying stocks like EPR Properties, Energy Transfer, and Walmart are positioned to deliver strong returns to investors. These companies offer attractive dividend yields, supported by robust financials and optimistic growth prospects. By considering recommendations from top analysts, investors can identify promising dividend stocks that align with their investment objectives.