Analysts prefer these dividend stocks for boosting portfolio returns

Dividend stocks remain a popular choice for investors seeking steady income and higher portfolio returns. However, with thousands of dividend-paying companies to choose from, identifying the right stocks can be challenging.

In this regard, recommendations from top Wall Street analysts can provide useful insights and help identify dividend stocks backed by solid fundamentals and with attractive upside potential.  

Here are three dividend-paying stocks that are highlighted by Wall Street’s top pros, as tracked by TipRanks, a platform that ranks analysts based on their past performance.

Permian Resources

Independent oil and natural gas company Permian Resources (PR) is this week’s first dividend stock. The company recently paid a quarterly base cash dividend of 16 cents per share. At an annualized dividend of 64 cents per share, PR offers a dividend yield of 3.5%.

Recently, Evercore analyst Chris Baker initiated coverage of Permian Resources stock with a price target of $25. The analyst believes that the company is well positioned to benefit from improving U.S. shale demand after the Iran conflict, thanks to its low-breakeven inventory that can boost free cash flow growth. Baker also noted PR’s disciplined consolidation in the Permian Basin.

Furthermore, the 5-star analyst highlighted the company’s focus on a single basin and management’s efficient capital allocations across expansion efforts, strategic acquisitions, and share buybacks. Baker noted that management focuses investments on the higher-return Northern Delaware Basin, helping boost profitability.

“The key piece of our work here, and the reason we think PR deserves a higher multiple relative to more finite or less flexible shale stories, is that PR runs an acquire and exploit model,” said Baker.

He explained that Permian Resources deserves a premium valuation as it continually acquires and develops new high-quality assets instead of relying on a limited inventory, a strategy that is the market is underappreciating.

Baker ranks No. 862 among more than 12,300 analysts tracked by TipRanks. His ratings have been successful 75% of the time, delivering an average return of 48.3%. See Permian Resources Ownership Structure on TipRanks.

Valero Energy

Valero Energy (VLO) is a manufacturer and marketer of petroleum-based and low-carbon liquid transportation fuels and petrochemical products. At a quarterly dividend of $1.20 per share, or annualized dividend of $4.80 per share, VLO stock offers a yield of about 2%.

Heading into Valero’s second-quarter earnings on July 30, Goldman Sachs analyst Neil Mehta reiterated a buy rating on VLO stock and increased the price target to $286 from $283 to reflect updated estimates.  

Specifically, the 5-star analyst raised his 2026 and 2027 earnings per share estimates to $31.42 and $23.07 from $29.42 and $21.06, respectively, while leaving the 2028 EPS estimate unchanged at $20.37. Mehta made these revisions based on several factors, including updated commodity price assumptions and changes to refining capture rates.

Despite a strong year-to-date rally in VLO stock, Mehta still finds it compelling due to his more positive refining outlook. Moreover, the analyst sees the possibility of solid estimate revisions, which could drive the stock higher. He believes that Valero is well-positioned to benefit from improving refining market conditions due to its strong position in the Gulf Coast, solid balance sheet strength, and low-cost operations.

“Additionally, we believe the company’s premium asset portfolio and crude slate optionality should support capture rates and stronger cash flow generation in the near-term, ultimately supporting shareholder returns,” said Mehta.

Mehta ranks No. 742 among more than 12,300 analysts tracked by TipRanks. His ratings have been profitable 59% of the time, delivering an average return of 10.2%. See Valero Energy Statistics on TipRanks.

Ovintiv

Moving on to Ovintiv (OVV), a North American oil and natural gas producer. It has solid positions in North America’s premier oil basins – the Permian and the Montney. OVV offers a quarterly dividend of 30 cents per share, or an annualized dividend of $1.20 per share, implying a 2.3% yield.

Following meetings with management, RBC Capital analyst Gregory Pardy reaffirmed a buy rating on Ovintiv stock with a price target of $70, highlighting that the stock is on RBC’s Global Energy Best Ideas List.

“In our eyes, the depth of Ovintiv’s Montney position, streamlined portfolio, strong balance sheet and enhanced shareholder returns afford investors with an attractive valuation re-rating opportunity over time,” said Pardy.  

The 5-star analyst stated that his meetings with management bolstered his confidence in the company’s outlook and potential to achieve a higher valuation. Pardy noted Ovintiv’s transformation, with the company streamlining its portfolio from six basins (including the Uinta, Bakken and Anadarko) to two – the Montney and Permian – while enhancing the depth of its inventory.

Pardy also emphasized OVV’s improved shareholder returns and solid balance sheet following the recent sale of its assets in the Anadarko Basin for $3 billion.

Pardy ranks No. 169 among more than 12,300 analysts tracked by TipRanks. His ratings have been successful 64% of the time, delivering an average return of 22.3%. See Ovintiv Options Trading Activity on TipRanks.