As stock markets keep bouncing around, investors searching for reliable income can enhance their portfolios by looking into dividend stocks. However, picking the right high-dividend stocks from a vast array of options can be quite challenging.
This is where insights from leading Wall Street analysts can be beneficial. These experts evaluate a company’s fundamentals meticulously, assessing its capacity to maintain a consistent dividend before assigning Buy ratings.
Here are three high-dividend stocks that analysts are currently keeping an eye on, according to TipRanks, which measures analyst performance.
ARES Capital
This week’s first stock is ARES Capital (ARCC), a business development firm that offers financial solutions to the middle market. The company recently shared that its fourth-quarter profits surpassed expectations and announced a first-quarter dividend of 48 cents per share, set to be paid on March 31. ARCC boasts a dividend yield of 9.64%.
RBC Capital analyst Kenneth Lee reaffirmed his buy rating on ARES Capital, though he made a slight adjustment to his price target from $23 to $22. “We appreciate ARCC’s strong history of managing risk effectively throughout various market cycles and the scale advantages it enjoys,” Lee mentioned.
He noted that despite concerns surrounding software financing due to possible disruptions linked to artificial intelligence, ARES Capital’s credit performance remains robust. The company focuses on funding businesses involved in fundamental software, proprietary data, and regulated markets.
Lee is optimistic that ARCC’s credit performance is promising, with quarter-over-quarter receivables steady at 1.8% of the portfolio. Furthermore, the company’s internal risk grade has remained unchanged at 3.1, and investments in the lower risk grades account for about 4% of the portfolio. Lee conveyed that management views AI-related risks as minimal in the short term and manageable in the longer term.
Overall, his outlook on ARES Capital is positive, considering its market-leading position and competitive edge due to its scale. He emphasized that the dividend is well-supported by the company’s core earnings and realized profits.
ConocoPhillips
Next up is ConocoPhillips (COP), an oil and gas exploration and production company that recently shared its fourth-quarter performance and declared a first-quarter dividend of 84 cents per share. The company returned $9 billion, equating to 45% of its operational cash flow, to shareholders through $5 billion in share buybacks and $4 billion in dividends. COP’s dividend yield stands at 2.91%.
Goldman Sachs analyst Neil Mehta reiterated his buy rating on COP stock and increased his price target from $115 to $120. Despite concerns about lower-than-expected outlooks for U.S. natural gas, he remains optimistic about ConocoPhillips, citing its quality inventory and solid free cash flow.
Mehta highlighted that the company’s management is targeting an extra $7 billion in free cash flow by 2029 as part of its plans, while projecting around $1 billion of this could materialize in 2026, aided by the North Field East project.
“We perceive long-term value in this stock as key projects commence, and as capital gets utilized, oil supply and demand fundamentals begin to balance out,” Mehta stated.
The analyst believes ConocoPhillips can meet its free cash flow goals, supported by four major growth initiatives and ongoing cost-saving measures. He anticipates the company will return about 45% of its operating cash, consistent with its historical track record.
Devon Energy
Another noteworthy high-dividend stock this week is Devon Energy (DVN), a key player in oil and gas production with a diversified portfolio across several basins. Earlier this month, Devon announced an all-stock merger with Cotera Energy (CTRA), aiming to establish itself as a leading producer in the Permian Basin.
Post-merger, Devon plans to propose a quarterly dividend of 31.5 cents per share, up from its current fixed dividend of 24 cents, along with over $5 billion in stock buybacks, pending board approval. The annual dividend stands at 96 cents per share, leading to a yield of 2.14%.
Following the announcement, Siebert Williams Shank analyst Gabriele Sorbara maintained his Buy rating on Devon Energy and raised his price target from $50 to $55. Sorbara expects the acquisition to positively impact multiple financial metrics while slightly reducing net debt in relation to EBITDA.
He anticipates that the merger with Cotera will be well-received, as it will increase Devon’s scale and enhance its competitiveness. The analyst sees Devon improving its market position, which could potentially lead to a positive reassessment as the company pursues its financial goals.
Looking ahead to Devon’s upcoming fourth-quarter results, Sorbara expects strong operational performance and anticipates that investors will pay close attention to the Cotera merger, particularly insights into strategic assets and aims to achieve $1 billion in annual pre-tax synergies by 2027.
