Dividend investing has become an evergreen strategy, with many stock market participants opting to pad their portfolios with these income-generating stocks. This form of investing not only provides investors with a regular source of income in the form of periodic dividends, but there's also the potential for share price appreciation, as well.
That said, dividend stocks have struggled in 2023, with the group recording its worst first-half performance since 2009 as investors piled instead into artificial intelligence (AI)-fueled growth names. However, against a backdrop of rising geopolitical tensions and significant macroeconomic concerns, income plays are making a comeback in recent months.
Here, we'll highlight three dividend stocks that not only offer a healthy yield, but have outperformed the S&P 500 Index ($SPX) over the last tumultuous month. Plus, analysts are confident these stocks can keep climbing, with bullish consensus forecasts for upside from current levels.
Marathon Oil
Founded in 1887, energy giant Marathon Oil (MRO) is an oil and gas exploration company with interests in the U.S. and Africa. The company commands a market cap of $16.54 billion with a dividend yield of 1.43%.
Marathon Oil's share price is up 1.4% over the past month, besting a 1.8% pullback for the S&P 500 over this time frame.
In its latest quarterly results, Marathon Oil reported a decline in both revenue and earnings from the prior year, even though both figures topped the Street estimates. Revenues for the April-June period came in at $1.5 billion, down 34.3% from the prior year. EPS fell even more sharply, down 63.6% to $0.48, but surpassed the estimate of $0.43 per share. Notably, the company’s EPS has consistently exceeded expectations in each of the past five quarters.
Investors should note that MRO's next earnings report is due out tonight, Nov. 1, after the close of trading. Wall Street is looking for adjusted earnings of $0.69 per share on $1.76 billion in revenue.
Management may also address a pricing strategy change in its LNG operations from January 2024. The company is planning to transition to selling LNG in the global market from its current practice of selling it linked to Henry Hub pricing, which it expects to result in increased returns.
Analysts are bullish about Marathon Oil, with a consensus “Strong Buy” rating for the stock and a mean target price of $33.97 - indicating an upside potential of about 25% from current levels. Out of 19 analysts covering the stock, 14 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, 3 have a “Hold” rating, and 1 has a “Moderate Sell” rating.
Novo Nordisk
Danish multinational pharmaceutical company Novo Nordisk (NVO) is the world's largest producer of insulin and other diabetes medications. The almost century-old company also produces a range of other products for the treatment of obesity, hemophilia, and other serious chronic diseases.
Most recently, NVO has exploded in value thanks to its blockbuster diabetes drugs Ozempic and Wegovy, both of which have gained popularity for weight loss. So far, only Wegovy has received FDA approval for this usage.
Currently commanding a market cap of about $433.36 billion, NVO offers a dividend yield of 0.76%. The stock has rallied 7% over the past month, easily besting the broader equities market.
In Q2 2023, Novo Nordisk reported revenue of $7.93 billion, while adjusted earnings arrived at $1.26 per share. When NVO reports Q3 results on Nov. 2, Wall Street is looking for EPS of $0.66, on average, with revenue arriving at $8.14 billion.
Forward EPS growth for NVO is pegged at 22.8%, compared to the sector median of 5.2%, while forward revenue growth of 21.7% also far exceeds the sector median.
Analysts have a “Strong Buy” rating on NVO, with a mean target price of $110.50. This indicates an upside potential of about 13.5% from current levels. Out of eight analysts covering the stock, 7 have a “Strong Buy” rating, and 1 has a “Moderate Sell” rating.
Walmart
We round out our list with retail giant Walmart (WMT). Founded in 1962, Walmart has grown to become the world's largest retailer, with over 11,000 stores in 27 countries. Walmart sells a wide variety of products, including groceries, electronics, clothing, and home goods.
Currently commanding a market cap of $439.83 billion, Walmart stock offers a dividend yield of 1.39%. The retailer's share price is up nearly 3% over the past month.
Walmart's earnings results for the second quarter were marked by growth in both revenue and earnings. Revenues for the quarter came in at $161.6 billion, an increase of 5.7% from the year-ago period, as all segments except Sam's Club reported growth. EPS of $1.84 improved 4% from the previous year, and came in above analysts' expectations. Notably, EPS has topped expectations in each of the past five quarters.
Walmart's prominence in the retail space has been achieved on the backbone of a strong supply chain and logistics management. With 150 distribution centers, Walmart's distribution system is among the largest in the world, and serves a massive number of stores. It also caters to customers directly. Additionally, the company is making moves to enhance its omnichannel presence through its Walmart+ subscription service.
Internationally too, the company is widening its footprint. Recently, Walmart opened its first automated e-commerce fulfilment center in Canada. Over in India, the company's Flipkart division continues to remain the leading online marketplace in the country, and competes with Amazon (AMZN). Meanwhile, its digital wallet & online payment app, PhonePe - a subsidiary of Flipkart - just surpassed $1.15 trillion in total payment volume, and for the first time, fielded 5 billion transactions in a single month.
Analysts remain quite upbeat about Walmart, judging by the consensus “Strong Buy” rating on the stock and a mean target price of $179.13. This denotes an upside potential of roughly 9% from current levels. Out of 30 analysts covering the stock, 21 have a “Strong Buy” rating, 4 have a “Moderate Buy” rating, and 5 have a “Hold” rating.
