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.

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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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Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, he was a research analyst and editor at one of the leading financial publishing companies in North America. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. Jing holds a Master’s Degree in Economics and an Honours Bachelor of Science Degree, both from the University of Toronto.

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