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Top Wall Street analysts pick these dividend stocks for 2025

www.nbcsandiego.com 05-01-2025 04:10 4 Minutes reading
Major U.S. indices had a good run in 2024, thanks to the buzz around artificial intelligence and interest rate cuts. However, macro uncertainty could weigh on investor sentiment in 2025. In this scenario, investors looking for regular income can consider adding dividend stocks to their portfolios.Top Wall Street analysts can help investors pick attractive dividend stocks that offer consistent payments, supported by strong fundamentals.Here are three dividend-paying stocks, highlighted by Wall Street’s top pros as tracked by TipRanks, a platform that ranks analysts based on their past performance.Ares CapitalWe start with Ares Capital (ARCC), a specialty finance provider that offers financing solutions to private middle-market companies. With a quarterly dividend of 48 cents per share, ARCC stock offers a yield of 8.7%.In a research note on the 2025 outlook for business development companies (BDC), RBC Capital analyst Kenneth Lee reiterated a buy rating on ARCC with a price target of $23, calling the stock RBC’s favorite BDC name for 2025.“ARCC has a leading position in the BDC space, with benefits from scale, strong originations engine in the Ares direct lending platform (coverage across all MM segments), and ~20 years of experience and solid performance in the space,” said Lee.The analyst highlighted ARCC’s ability to offer flexible capital across various financing solutions for clients as differentiating it from its peers. Lee also noted other strengths, including the company’s impressive history in managing risks through the cycle, access to the resources of the Ares Credit Group, and scale advantages, given that it is the largest publicly traded BDC by assets.Lee also emphasized ARCC’s dividends, which are backed by the company’s core earnings per share and potential net realized gains.Lee ranks No. 23 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 71% of the time, delivering an average return of 18.1%. See Ares Capital Ownership Structure on TipRanks.ConocoPhillipsWe move to ConocoPhillips (COP), an oil and gas exploration and production company. In October, the company delivered better-than-expected third-quarter earnings and raised its full-year output guidance to reflect the impact of operational efficiencies.Moreover, ConocoPhillips raised its quarterly dividend by 34% to 78 cents per share and boosted its existing share repurchase authorization by up to $20 billion. Based on an annualized dividend per share of $3.12, COP stock offers a dividend yield of 3%.In a research note on the U.S. oil and gas outlook, Mizuho analyst Nitin Kumar upgraded ConocoPhillips stock to buy from hold and raised the price target to $134 from $132. “COP offers an enviable combination of long-duration inventory, a fortress balance sheet and peer-leading cash returns,” said Kumar.The analyst noted that the pullback in COP shares since the announcement of the Marathon Oil acquisition indicates that moderate inventory dilution resulting from the deal has already been priced into the stock. Additionally, Kumar noted the company’s confidence about achieving significantly high-than-expected deal synergies. Specifically, ConocoPhillips expects to generate about $1 billion in annual synergies, which is twice its initial target of $500 million.Kumar also emphasized that COP expects its 2025 capital expenditure to be below $13 billion, which could translate into additional free cash flow. The analyst believes that with its growing LNG presence and strong commercial marketing business, the company is well-positioned to gain from the rising global LNG demand and international pricing. Kumar ranks No. 336 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 58% of the time, delivering an average return of 12.1%. See ConocoPhillips Insider Trading Activity on TipRanks.Darden RestaurantsFinally, let’s look at Darden Restaurants (DRI), a restaurant company that owns several popular brands like Olive Garden, LongHorn Steakhouse, Yard House, and Cheddar’s Scratch Kitchen. The company recently announced its results for the second quarter of fiscal 2025 and raised its annual sales guidance.Along with its Q2 FY25 results, the company announced a quarterly dividend of $1.40 per share, payable on Feb. 3. At a quarterly dividend of $1.40 per share (annualized dividend of $5.60), DRI offers a yield of about 3%.Following the results, BTIG analyst Peter Saleh reiterated a buy rating on DRI stock and raised the price target to $205 from $195, saying that “management has multiple levers to achieve full-year guidance.” He thinks that while the results were encouraging, the impact of hurricanes and the Thanksgiving calendar shift overshadowed certain favorable sales trends.Highlighting the strong performance of the LongHorn Steakhouse and Olive Garden chains, the analyst noted that the rise in visits from lower-and middle-income consumers reflected a notable turnaround from the trends observed in recent quarters. Among the other positives, Saleh also noted the faster-than-anticipated rollout of Uber Eats delivery and the reducing value gap compared with quick-service restaurants, thanks to Darden’s restrained pricing. The analyst expects all these positive factors to drive robust performance in the second half of fiscal 2025. Overall, Saleh views Darden as an industry-leading restaurant operator delivering consistent earnings growth at a lucrative valuation.Saleh ranks No. 366 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 62% of the time, delivering an average return of 11.8%. See Darden Restaurants Hedge Funds Activity on TipRanks.

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