Looking at the analysts’ best-rated dividend stocks, it’s immediately clear that Wall Street is expecting great gains from a hard-hit energy sector in 2021.
Professionals are betting that the post-pandemic landscape will, among other factors, be characterized by rising energy needs as well as a rebound in commodity prices. And as the oil and gas industry is expected to recover next year, the list of dividend stocks for 2021 includes energy stocks of all kinds: oil and gas drilling companies, pipeline companies, oilfield services and the like.
The energy sector is the largest on our list of analyst favorite dividend stocks, but banks, pharmaceuticals, and consumer-sector companies are also on the list.
To find the dividend stocks that analysts love the most, we scoured the S&P 500 for options with at least 3% yields, excluding a number of extremely high-yielding stocks due to excessive risk. (Sometimes profitability that is too high can signal that the company is in serious trouble.)
From this pool, we have selected stocks with a Buy recommendation or better. S&P Global Market Intelligence has studied the ratings of stocks from analysts and evaluated them on a five-point scale, where 1.0 is equivalent to Strong Buy, and 5.0 is equivalent to Strong Sell. Any rating from 2.5 or below means that analysts recommend the stock for purchase on average. The closer the score is to 1.0, the stronger the recommendation.
Finally, we have scrutinized various studies, fundamentals, and analyst ratings for the top rated titles.
We ended up picking the top 25 dividend stocks for 2021 with the highest analyst ratings and bullish forecasts. Further we will tell you what distinctive features each of them has.
Stock prices, dividend yields, analyst ratings and other data are current as of December 17 and provided by S&P Global Market Intelligence, unless otherwise noted. Companies are ranked by average analyst score, from lowest to highest. The dividend yield is calculated by recalculating the last payment on an annualized basis and dividing by the share price.
- Truist Financial
- Market cap: $ 63.5 billion
- Dividend Yield: 3.8%
- Average rating from analysts: 2.00.
Almost exactly a year ago, regional banks BB&T and SunTrust Banks closed a $ 66 billion merger to form Trust Financial (TFC, $ 47.10), the country’s sixth bank in terms of both assets and deposits.
And, analysts say, the combined company is just beginning to reap the full benefits of this merger.
Over the past three months, TFC shares are up 20% on the S&P 500 up 11%, but they are still down 17% YTD. Analysts believe this is a promising option. Of the 24 analysts who reviewed the TFC share in the S&P Global Market Intelligence study, 10 rated Strong Buy, four rated Buy, and 10 rated Hold, which allowed it to enter the professional dividend portfolio for 2021.
- Market cap : $ 170.2 billion
- Dividend Yield: 5.8%
- Average rating from analysts: 1.96.
The only energy company among thirty Dow Jones Today stocks has taken advantage of the slump in oil prices to acquire attractive assets at competitive prices.
In early October, Chevron (CVX, $ 88.41) acquired Noble Energy, which had a publicly traded market value of over $ 4 billion. UBS has welcomed the deal, calling it an “ extremely attractive price consolidation” that strengthens CVX’s financial performance amid low oil prices.
However, UBS rates the stock as Neutral (equivalent to Hold), but in this case they were in the minority. Of the 26 analysts who reviewed Chevron in the S&P Global Market Intelligence survey, 10 rated Strong Buy, seven rated Buy, and nine rated Hold. An excellent dividend yield of almost 6% underpins the positive outlook.
- Fifth Third Bancorp
- Market cap: $ 19.3 billion
- Dividend Yield: 4.0%.
- Average rating from analysts: 1.95.
Fifth Third Bancorp (FITB, $ 27.13) receives mostly high ratings from analysts, and some see this large regional bank as a good option to play in the pandemic recovery, underpinned by solid quarterly results.
Baird Equity Research is also optimistic about the nation’s 15th-largest bank by assets and added it to its top ideas list at the end of the third quarter.
S&P Global Market Intelligence predicts that this dividend stock, which currently yields 4%, will deliver 8.2% CAGR in earnings over the next three to five years. In terms of Wall Street’s opinion, FITB has nine Strong Buy recommendations, five Buy recommendations, and eight Holds.
- Citizens Financial
- Market cap: $ 14.9 billion
- Dividend Yield: 4.4%
- Average rating from analysts: 1.95.
Citizens Financial (CFG, $ 34.78), another regional lending provider, is receiving positive reviews from most Wall Street analysts.
Of the analysts who reviewed Citizens, nine rated it Strong Buy, six rated Buy, five rated Hold, and one even rated it Strong Sell. The bullish outlook is supported by the fact that CFG remains optimistic about the trajectory of the economic recovery and its implications for business.
The market is aware of the fact that better times are just around the corner. CFG shares are up about 30% over the past month.
When it comes to returns on equity, Citizens is one of the most profitable dividend stocks on this list. The bank has raised its quarterly payments annually for the past five years, most recently to 39 cents per share. This implies an increase of 290% from the 10 cents per share the company paid in 2016.
- Sempra Energy
- Market cap: $ 38.0 billion
- Dividend Yield: 3.2%
- Average rating from analysts: 1.94.
Sempra Energy (SRE, $ 131.74) is a diversified utility company that should capitalize on current industry trends. This power and natural gas infrastructure company is expected to get more out of its utility business as it overcomes the COVID-19 crisis.
Sempra is also well suited for investors looking for a steady income. Over the past five years, SRE has increased its dividend at a compound annual rate of 8.3%. During 2020, the company paid $ 4.1025 per share; in 2021, according to Argus Research estimates, payments will increase to $ 4.38.
Finally, Sempra has a fairly attractive long-term growth rate for the utility sector. According to S&P Global Market Intelligence, analysts are forecasting an average of 7.5% profit growth annually over the next three to five years. Their views on the company are quite positive: SRE boasts eight Strong Buy recommendations and three Buy against seven Holds.