Wall Street Analysts Highlight Three Dividend Stocks for Stability
Investor sentiment is being impacted by concerns surrounding a potential government shutdown, a slowing labor market, and elevated stock valuations. As uncertainty looms, experts suggest that investors seeking stable returns should consider dividend-paying stocks. According to data from TipRanks, a platform that tracks analyst performance, several top Wall Street analysts have identified three companies that stand out for their strong fundamentals and reliable dividends.
BROOKFIELD INFRASTRUCTURE PARTNERS
First on the list is Brookfield Infrastructure Partners (BIP), a global leader in infrastructure, managing diversified assets across utilities, transportation, midstream, and data sectors. On September 29, 2023, Brookfield announced a dividend of 43 cents per unit, marking a significant 6% year-over-year increase. With an annualized dividend of $1.72 per unit, BIP offers a notable dividend yield of 5.2%.
Following a recent Investor Day event, Devin Dodge, an analyst with BMO Capital, reaffirmed a buy rating for Brookfield Infrastructure, setting a price target of $42. He noted that the management’s presentations showcased strong organic growth trends, which he expects to become increasingly apparent in the coming quarters. Dodge emphasized the growing number of high-growth platforms within Brookfield’s portfolio, particularly highlighting the expanding opportunities in digital infrastructure.
With predictions suggesting that capital spending from hyperscalers could rise by 50% this year, Brookfield’s data center platforms are anticipated to experience substantial growth. Dodge observed that Brookfield’s funds from operations per unit (FFO/unit) growth is nearing a pivotal point. Over the past five years, FFO/unit has seen a compound annual growth rate of approximately 10%, despite facing challenges such as foreign exchange fluctuations and high interest rates. He believes these pressures will alleviate soon, potentially driving further FFO growth. “As FFO/unit growth shifts higher, we believe there are positive implications for distribution growth and valuation,” Dodge remarked.
Interestingly, TipRanks’ AI Analyst offers a “neutral” rating for BIP, with a price target of $33. Dodge currently ranks No. 377 among over 10,000 analysts tracked by TipRanks, with a success rate of 73%, yielding an average return of 13.2%.
ARES CAPITAL
Next on the list is Ares Capital (ARCC), a specialty finance company that provides loans and investments to private middle-market firms. Ares Capital currently pays a quarterly dividend of 48 cents per share, resulting in an annualized dividend of $1.92 per share and a substantial yield of 9.4%.
In a recent update regarding business development companies, Kenneth Lee, an analyst with RBC Capital, reiterated his buy rating on Ares Capital, increasing his price target to $24. Meanwhile, TipRanks’ AI Analyst has assigned an “outperform” rating to ARCC, with a price target of $25. Lee expressed a strong preference for Ares Capital, alongside Blackstone Secured Lending Fund (BXSL) and Sixth Street Specialty Lending (TSLX).
“Ares has a long track record of successfully managing risks through cycles,” Lee noted. He highlighted Ares Capital’s competitive advantages, including its access to the Ares global credit platform. Lee is optimistic about Ares Capital’s capacity to generate returns above the peer average. He cites the company’s experienced senior management team as a key asset, with dividends supported by core earnings and potential net realized gains. Lee ranks No. 59 among analysts tracked by TipRanks, with a success rate of 72% and an average return of 16.7%.
ONE GAS
Finally, ONE Gas (OGS), a fully regulated natural gas utility, serves over 2.3 million customers across Kansas, Oklahoma, and Texas. The company offers a quarterly dividend of 67 cents per share, translating to an annualized dividend of $2.68 per share and a yield of 3.3%.
Recently, Gabe Moreen, an analyst at Mizuho, upgraded OGS from hold to buy, raising his price target from $77 to $86. Moreen cited the benefits of Texas House Bill 4384, which allows for the recovery of certain costs associated with a gas utility’s infrastructure. He expects this legislation to contribute approximately 18 cents in incremental earnings per share in fiscal 2026, with growth potential continuing as ONE Gas expands its Texas capital spending. Texas constitutes about 32% of OGS’s rate base.
“This will place a floor under OGS’s growth outlook at the higher end of its 4-6% range,” Moreen stated. He also pointed to the potential for interest rate cuts by the Federal Reserve to reduce relative interest expenses, which should bolster the company’s financial performance. Moreen anticipates significant growth for OGS due to rising natural gas demand from data centers and advanced manufacturers. He believes these factors, combined with a solid balance sheet and expanding customer base, make OGS an appealing investment at its current valuation. Moreen ranks No. 142 among analysts tracked by TipRanks, achieving a success rate of 75% and an average return of 13.3%.
As investors navigate turbulent market conditions, these three dividend stocks, recommended by leading analysts, may provide the stability and income many seek during uncertain times.
