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Healthy dividend stocks have the potential to:

  • Offer a plump income stream in both good times and bad times.
  • Provide much-needed diversification to growth-oriented portfolios.
  • Outperform the S&P 500 over the long haul.

While the prevailing sentiment is far from bullish, Wall Street still likes dividend stocks. Here are three that analysts find particularly attractive.

AT&T (T)

Let’s start with a household name.

AT&T is one of the largest telecommunications companies in the world. More than 100 million consumers in the U.S. use its mobile and broadband services. At the same time, the company also serves nearly all of the Fortune 1000 companies with connectivity and smart solutions.

And because wireless and Internet services are necessities for the modern economy, AT&T generates a recurring business through thick and thin.

The company pays quarterly dividends of 27.75 cents per share, translating to an annual yield of 5.2%. To put things in perspective, the average S&P 500 company yields just 1.6%.

Last month, Goldman Sachs analyst Brett Feldman reinstated coverage of AT&T with a ‘buy’ rating. He also set a price target of $23 — roughly 8% above where the stock sits today.

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Simon Property Group (SPG)

Real estate has been a popular inflation hedge throughout history. Not only do real estate prices tend to increase in an inflationary environment, but rental properties can also generate a stable income stream for investors.

These days, you don’t need to be a landlord to collect rent checks. Publicly traded real estate investment trusts own and operate income-producing properties on investors’ behalf.

Simon Property, for instance, owns commercial real estate — shopping malls, outlet centers, and community/lifestyle centers — across North America, Europe, and Asia.

Simon Property’s board of directors recently approved a 3% increase to the company’s quarterly dividend payment to $1.70 per share, giving the stock an annual yield of 6.1% at the current price.

Earlier this month, Stifel analyst Simon Yarmak reiterated a ‘buy’ rating on Simon Property. His price target of $165 implies a potential upside of 43%.

Plains All American Pipeline (PAA)

For investors looking for oversized yield in today’s market, the energy sector simply can’t be ignored.

With strong oil and gas prices, producers are making money hand over fist. But when it comes to returning cash to investors, midstream operators might do an even better job.

Check out Plains All American Pipeline, a master limited partnership with an extensive network of pipeline gathering and transportation systems. The partnership says that its goal is to “increase its distribution to Unitholders over time through a combination of organic and acquisition-oriented growth.”

Management recently raised PAA’s quarterly distribution by 21% to $0.2175 per unit. At the current unit price, the stock yields a generous 7.7%.

While the broad market is deep in the red year to date, PAA climbed 11% in 2022.

Morgan Stanley expects the uptrend to continue. Its analyst Robert Kad recently raised the price target on Plains All American Pipeline from $14 to $15 — implying a potential upside of 33% from the current levels.

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Jing Pan Investment Reporter

Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.

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