Selecting the right dividend-paying stocks can be a daunting task for any investor. However, Wall Street’s best analysts provide valuable insights into companies’ ability to provide attractive dividend yield and long-term upside. Kimberly-Clark (KMB) is a consumer products giant that stands out as this week’s first dividend pick. Known for popular brands like Huggies and Kleenex, Kimberly-Clark is a dividend king, having raised their dividends for at least 50 consecutive years.
In the first quarter of 2024, Kimberly-Clark returned $452 million to shareholders through dividends and share repurchases. With a quarterly dividend of $1.22 per share ($4.88 on an annualized basis), KMB offers a dividend yield of 3.5%. Recently, RBC Capital analyst Nik Modi upgraded his rating for KMB stock to buy from hold and increased the price target to $165 from $126. Modi’s upgrade was based on a thorough assessment of the company, indicating that Kimberly-Clark has transitioned from a cost-focused company to a growth-oriented enterprise under the leadership of its CEO Mike Hsu.
Modi is confident that Kimberly-Clark is well-positioned for faster and more reliable growth, aiming to achieve long-term targets such as a gross margin of 40% and a compound annual growth rate of over 3% in revenue by 2030. This transformation was largely attributed to the company’s decision to reorganize into three business units, significantly reducing product costs and improving speed to market. Despite these positive prospects, investors should conduct their own due diligence on Kimberly-Clark before making any investment decisions.
Chord Energy (CHRD), an oil and gas operator in the Williston Basin, is another promising dividend stock on Wall Street’s radar. In June, the company paid a base dividend of $1.25 per share along with a variable dividend of $1.69 per share. Following the completion of its acquisition of Enerplus, Chord Energy expects to enhance its position in the Williston Basin, focusing on scale expansion, low-cost inventory, and solid shareholder returns.
Mizuho analyst William Janela reaffirmed a buy rating on CHRD stock with a price target of $214, emphasizing the company’s increased estimate for annualized deal synergies. With over $200 million in projected synergies, the deal is expected to drive above-average cash returns and maintain below-average financial leverage. Janela highlighted the attractive relative valuation of Chord Energy’s shares, trading at a discount to peers based on Free Cash Flow to Enterprise Value ratio.
Investors should consider the potential risks associated with investing in oil and gas companies, including commodity price fluctuations and regulatory challenges. Conducting a thorough analysis of Chord Energy’s financial health and growth prospects is essential before making any investment decisions.
Cisco Systems (CSCO), a dividend-paying technology stock, presents an intriguing opportunity for investors looking to balance their portfolios with stable income. The company paid $2.9 billion to shareholders in the third quarter of fiscal 2024, including dividends of $1.6 billion and share repurchases of $1.3 billion. With a quarterly dividend of 40 cents per share, CSCO offers a dividend yield of 3.5%.
After a recent investor and analyst day event, Jefferies analyst George Notter reiterated a buy rating on Cisco stock with a price target of $56. Notter expressed optimism about Cisco’s prospects and strategy following the event, especially in relation to its acquisition of Splunk, a cybersecurity company. Cisco is anticipated to maintain low-to-mid-single-digit revenue growth in fiscal 2025, with growth targets of 4-6% year-over-year in fiscal 2026 and 2027.
Investors interested in Cisco should closely monitor the company’s execution of its growth strategy, competitive positioning in the technology sector, and overall market conditions. While dividend-paying stocks like Cisco Systems can provide a steady income stream, it is essential to assess the company’s long-term growth potential and financial stability before investing.