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3 'Strong Buy' Dividend Stocks To Kickstart 2018

High dividend stocks appeal to many investors. But as well as a high dividend, it is crucial that these stocks are safe. Otherwise the dividend payout looks set to go down rather than up. To help you find compelling dividend ideas we looked for stocks that also have the support of the Street. If a stock has a ‘Strong Buy’ analyst consensus rating, that suggests it has a better risk profile than stocks where the Street outlook is more bearish.

We used the Nasdaq Smart Portfolio’s powerful stock screener to help us pinpoint three top dividend stocks. The screener has nine unique filter options, but we zeroed in on just three. As you can see below, we looked for: mega or large cap stocks from any sector with a high or very high dividend yield and a Strong Buy analyst consensus rating. This rating is based on analyst stock ratings over the last three months only.

From the 20 stocks that the system pulled up, let’s take a closer look at these three:

Broadcom Ltd (AVGO)

Semiconductor giant Broadcom has just paid a dividend of $1.75, up from $1.02 the previous quarter. Indeed, with a dividend yield of 2.7%, AVGO has an impressive dividend growth record of eight years and counting.

From a Street perspective, AVGO looks pretty watertight right now. The stock has 100% Street support with no less than 26 consecutive buy ratings in just three months. These analysts are confident AVGO can spike a further 24% to hit the $318 average analyst price target. For example, top Oppenheimer analyst Rick Schafer has just called AVGO his best stock idea for December- January.

He said, “We believe AVGO has one of the most strategically and financially attractive business models in semiconductors.”

Schafer lists four key reasons for his positive outlook on AVGO. The company has 1) a sustained competitive advantage in the growing high-end filter market; 2) a highly diversified, differentiated and "sticky" non-mobile business offering; 3) and efficiently managed manufacturing advantage; and 4) substantial EPS and free cash flow accretion heading its way from the 2016 Broadcom acquisition and the more recent Brocade acquisition.

So far Schafer seems to know what he is talking about when it comes to AVGO. Across his 37 ratings on the stock he boasts an impressive 93% success rate and 41% average return.

Crown Castle (CCI)

Crown Castle is the US's largest provider of wireless infrastructure. CCI only began paying dividends in 2014 but it is already an interesting dividend pick with a with a current yield of 3.78%. The company’s last payout came out at $1.05, up from $0.95 in September.

Importantly, this US-focused stock also boasts a ‘Strong Buy’ Street consensus rating and upside potential of 6% from the current share price. One of the analysts in support of CCI is five-star RBC Capital analyst Jonathan Atkin. In fact, Atkin is one of the top 10 analysts on TipRanks out of over 4,700 tracked analysts based on his 87% success rate and 19% average return. This five-star analyst currently has a buy rating and $125 price target on CCI (suggesting 12% upside potential). He sees upside to 2018 numbers and says:

“We believe Crown Castle is well positioned to benefit from the continuing deployment of wireless capacity and coverage in the US and has clear visibility of revenue and EBITDA due to long-term contracts and rent escalators.” At the same time, the company’s “investment appeal is enhanced by its attractive dividend, which should broaden investor interest amongst income investors.”

NextEra Energy Inc (NEE)

‘Strong Buy’ stock NextEra Energy is a leading clean energy company with over 46,000 megawatts of generating capacity. This breaks down into four different type of energy generation- wind, solar, fossil fuel and nuclear energy. Back on the 15th of December, NEE paid out a dividend of $0.983 at a yield of just over 2.52%. Note that the company has recorded eight consecutive years of dividend growth.

Argue Research analyst Jacob Kilstein picks up on this when he reiterates his NEE buy rating while ramping up his price target from $165 to $173 (11% upside). The company's premium valuation versus peers is justified by its consistent EPS and dividend growth, says Kilstein. And looking to the future, Kilstein stays confident that the company’s ongoing growth opportunities will continue to support dividend and earnings growth for some time to come.

Our database covers over 5,000 stocks. Find your own “Strong Buy” stocks in the sector that interests you the most. Go to the Nasdaq Smart Portfolio stock screener now.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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