U.S. markets closed

25 Dividend Stocks the Analysts Love the Most

Dan Burrows, Contributing Writer, Kiplinger.com

Getty Images


The longest bull market in history came to a crashing end on Feb. 19 as panic over the global spread of COVID-19 sent stocks into a tailspin. The S&P 500, the most common benchmark for the U.S. equity market, plunged 30% in only a month.

The outlook for stocks has arguably never been more uncertain. The situation under which we live is subject to change not just by the day, but by the hour. Although there are few places for equity investors to hide these days, Wall Street analysts are pinning their hopes on a select group of dividend stocks.

Dividends are known for adding some defensive characteristics to stocks, and so it makes sense at this time to single them out. To that end, we scoured the S&P 500 for dividend stocks with yields of more than 2%, excluding a number of extremely high yielders because of excessive current risk (such as certain energy stocks). Sometimes, a too-high yield can be a warning sign that a stock is in deep trouble.

From that pool, we focused on stocks with an average broker recommendation of Buy or better. S&P Global Market Intelligence surveys analysts' stock ratings and scores them on a five-point scale, where 1.0 equals Strong Buy and 5.0 means Strong Sell. Any score of 2.0 or lower means that analysts, on average, rate the stock a Buy. The closer the score gets to 1.0, the stronger the Buy call.

Lastly, we dug into research and analysts' estimates on the top-scoring names.

That led us to these top 25 dividend stocks, by virtue of their high analyst ratings, at this unprecedented moment in American history.

SEE ALSO: 64 Dividend Stocks You Can Count On

Mondelez International

Getty Images


Market value: $65.2 billion

Dividend yield: 2.5%

Analysts' average rating: 1.91

Shares in Mondelez International (MDLZ, $45.47) are down a painful 28% since the bull market top of Feb. 19 to lag the S&P 500 by about 5 percentage points. But the company was showing strong sales growth before the coronavirus hit, and Americans holed up in their homes should only increase demand for long-lived edibles.

If there was a knock on Mondelez, it was the valuation. For instance, in January, Stifel rated MDLZ at Hold because it was already trading at a significant premium to peers. Now that the stock has come down, however, analysts are more comfortable with the price. The yield, which still isn't great compared to the other top 25 dividend stocks on this list, has at least come up as a result of those declines, too.

It also helps that in late February, Mondelez bought a majority stake in Give & Go, which sells sweet baked goods in supermarkets and other retailers. Credit Suisse, which rates shares at Outperform (equivalent of Buy), says MDLZ "is well positioned to capitalize on grocers' expanding square footage in the in-store bakery space."

Analysts surveyed by S&P Global Market Intelligence expect the company to deliver average annual earnings growth of 8% over the next five years.

SEE ALSO: 11 Defensive Dividend Stocks for Riding Out the Storm

Eaton

Getty Images


Market value: $29.8 billion

Dividend yield: 4.0%

Analysts' average rating: 1.88

Eaton (ETN, $72.45), which sells a vast portfolio of electrical and industrial components, is a popular stock in the industrials sector. Thirteen analysts polled by S&P Global Market Intelligence rate the stock at Strong Buy, and another four say Buy. That compares to nine Holds and zero analysts saying to ditch the stock.

Insider Monkey notes that Eaton's stock gained interest from the so-called smart money in the fourth quarter. Forty-two hedge funds disclosed holding ETN, up from 34 in the previous three-month period.

"Eaton's strong balance sheet and sharply increased liquidity following completion of the sale of its Lighting business early Monday, March 2, are notably reassuring for investors during uncertain times along with its increasingly less cyclical business mix," says William Blair Equity Research, which rates the stock at Hold.

Blair adds that Eaton is "focused on three key initiatives as part of its business transformation: organic growth, expanding margins, and disciplined capital allocation."

SEE ALSO: 12 Bond Mutual Funds and ETFs to Buy for Protection

Boston Properties

Getty Images


Market value: $13.3 billion

Dividend yield: 4.6%

Analysts' average rating: 1.87

Real estate investment trusts (REITs) tend to be solid equity income plays. That's because they are required to pay out at least 90% of their taxable earnings as dividends in exchange for certain tax benefits. As such, REITs often carry higher yields than other dividend stocks.

Boston Properties (BXP, $85.57) is one of a few REITs that analysts have remained bullish on so far in this bear market. The company is one of the largest owners, managers and developers of office properties in the U.S. Its main markets include the pricey cities of Boston, Los Angeles, New York, San Francisco and Washington, D.C.

A hefty dividend yield well above 4% allows BXP to fulfill its role as an equity income investment. Zacks Investment Research says the REIT is a great dividend stock right now. "Boston Properties has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 10.91%," Zacks says.

Stifel upgraded the REIT from Hold to Buy on March 10, citing diving interest rates as a reason to "get more positive on quality REITs," and believing BXP to be a more defensive play going forward.

Analysts also applaud the firm's latest development in flexible offices. The 35,000-square-foot space in Boston features an apartment tower, a CitizenM Hotel, restaurants such as Guy Fieri Tequila Cocina, Banners Kitchen & Tap, an Arclight Cinemas movie theater and a Star Market Grocery Store.

Naturally, exposure to those kinds of tenants is part of why BXP is off 40% during the past month. But the pros appear to believe in the company's ability to bounce back once coronavirus precautions are rolled back.

SEE ALSO: The 12 Best ETFs to Battle a Bear Market

EOG Resources

Getty Images


Market value: $19.3 billion

Dividend yield: 4.5%

Analysts' average rating: 1.87

EOG Resources (EOG, $33.22), the largest oil-and-gas driller in South Texas, is among a few energy stocks that counterintuitively made this top 25 list of dividend stocks. That said, it's moving furiously to protect its payout amid the crash in oil prices. EOG said it's cutting projected annual spending by 31% to direct cash back to shareholders.

"Our first priority is to generate high returns with every dollar we spend even at low oil prices," CEO Bill Thomas said in a statement. "With oil around $30, our 2020 premium drilling program is expected to generate more than 30% direct after-tax rate of return."

Analysts were relieved to hear the news, as a number of energy stocks have been either forced to reduce their payouts or at least consider doing so. But EOG is getting out in front of such concerns.

"EOG noted that this is not an environment to take a wait-and- see approach," writes RBC Capital Markets analysts. "The dividend remains its priority and will cut activity to maintain its payout."

Thirteen analysts call EOG a Strong Buy at the moment, while nine say it's a Buy. Eight call it a Hold, and one has it at Strong Sell.

SEE ALSO: 10 Low-Volatility ETFs for This Roller-Coaster Market

CVS Health

Getty Images


Market value: $72.2 billion

Dividend yield: 3.6%

Analysts' average rating: 1.86

CVS Health (CVS, $55.38), like a number of other health-care stocks, is outperforming the S&P 500 since the market top. Yes, it's still off about 24% during the bear market. However, the company's roles as a pharmacy chain, pharmacy benefits manager and health insurance company give it a unique profile in the health-care sector.

CVS also is one of the relatively few companies getting a boost from the COVID-19 outbreak.

"CVS is seeing a lift in its front store in general healthcare products, as well as cleaning supplies, general household merchandise, sanitizers, etc." writes Credit Suisse, which rates shares at Neutral (equivalent of Hold).

Investors looking for dividend stocks should just note that while CVS has a strong payment history, it ended its 14-year streak of dividend hikes in 2018. The company kept its payout level, choosing instead to divert cash toward paying off its debt, which ballooned when it assumed $8 billion of Aetna's debt after it acquired the insurer in 2018.

But you're getting a stronger balance sheet as a result. Analysts write that CVS Health has paid down $8 billion since the close of the Aetna transaction, and it plans to pay down roughly $3.8 billion in debt in 2020.

SEE ALSO: The 11 Best (And 11 Worst) Stocks of the 11-Year Bull Market

United Technologies

Getty Images


Market value: $72.6 billion

Dividend yield: 3.5%

Analysts' average rating: 1.85

There are a lot of moving parts at United Technologies (UTX, $83.76) these days, but analysts still mostly like what they see.

The industrial conglomerate in November closed its $30 billion acquisition of defense contractor Rockwell Collins. However, it will soon split apart into three separate companies. UTX will spin off its Otis elevator unit and the Carrier heating-and-cooling-systems division later this year to focus on aerospace.

But the really big news came in June 2019, when United Technologies announced a merger with defense contractor Raytheon (RTN). The deal, pending approval, would create a company with a market value of more than $100 billion after its spinoffs. Only Boeing would be a bigger aerospace-and-defense company by revenue.

Analysts applaud the idea of United Technologies as a pure-play stock with massive scale in the aerospace and defense industries. At the end of January, Benchmark Securities initiated coverage of UTX at Buy ahead of "its historic split."

Shares have plunged about 45% since the market top, and they're back to levels last seen eight years ago, but a plurality of analysts are sticking by their bull cases. JPMorgan Chase, for instance, recently reiterated its Overweight rating, saying it thinks the stock has "pulled back too much."

SEE ALSO: 11 Best Stocks to Ride Out the Coronavirus Outbreak

Honeywell

Getty Images


Market value: $84.1 billion

Dividend yield: 3.0%

Analysts' average rating: 1.84

Honeywell (HON, $118.96), a multinational industrial conglomerate, has tumbled with the rest of the market, but some analysts say this defense contractor has defensive properties.

"The fear for investors now is that COVID-19 appears to be the 'black swan' event that is finally ending the commercial aerospace cycle," writes Canaccord Genuity. "We believe the risks around COVID-19 and uncertainty in the commercial aerospace sector will favor defense stocks."

Of the analysts covering Honeywell stock, 12 have it at Strong Buy, six say Buy and seven say Hold. Their average annual growth forecast is 8.5% for the next three to five years. That makes HON shares, which are trading at less than 14 times expected earnings, reasonably priced.

A decent dividend yield of 3% - about 50% better than the S&P 500 - adds to the appeal.

SEE ALSO: 11 Stocks to Sell That Analysts Are Souring On

Exelon

Getty Images


Market value: $31.6 billion

Dividend yield: 4.7%

Analysts' average rating: 1.84

Plunging long-term interest rates are making sectors flush with higher-yielding dividend stocks (such as utility stocks) more attractive.

With the yield on the 10-year Treasury note setting record lows in mid-March, Exelon (EXC, $32.41) looks pretty attractive to analysts and income investors alike. The nation's largest utility company by revenue offers a generous 4.7% yield on its dividend.

BMO Capital Markets initiated coverage of EXC in February at Outperform (equivalent of Buy), noting that Illinois clean energy legislation has the potential to "materially move investor perception" of Exelon.

Of the 19 analysts covering Exelon tracked by S&P Global Market Intelligence, seven rate the stock at Strong Buy, eight say it's a Buy and four call EXC a Hold. While analysts have been lowering their price targets to keep up with the sharp decline in EXC and the rest of the market, the consensus price target of $52.06 implies more than 60% of upside from current levels.

SEE ALSO: Every Warren Buffett Stock Ranked: The Berkshire Hathaway Portfolio

Lowe's

Getty Images


Market value: $53.6 billion

Dividend yield: 3.2%

Analysts' average rating: 1.84

When it comes to home improvement chains, Home Depot (HD), a member of the Dow Jones Industrial Average, gets all the glory.

But rival Lowe's (LOW, $69.87) has Home Depot beat when it comes to longtime dividend growth.

Lowe's has paid a cash distribution every quarter since going public in 1961, and that dividend has increased annually for more than half a century. Most recently, in May 2019, Lowe's announced that it would lift its quarterly payout by 14.5% to 55 cents a share.

While Lowe's easily makes the top 25 of analyst-favored dividend stocks, there's still some room for concern. Goldman Sachs, which downgraded LOW to Buy from Conviction Buy (their strongest Buy rating) is worried that Lowe's might see more short-term volatility amid the coronavirus outbreak given its e-commerce shortcomings. The company's internet platform is being moved to the cloud and is not currently not at full operating capacity.

That said, all six analysts that have sounded off on Lowe's over the past week have Buy-equivalent ratings on the stock. That's in part because further out, the pros are projecting average annual earnings growth of more than 15%.

SEE ALSO: The 25 Best Low-Fee Mutual Funds to Buy in 2020

BlackRock

Getty Images


Market value: $61.5 billion

Dividend yield: 3.7%

Analysts' average rating: 1.83

Analysts see outsize upside in shares of BlackRock (BLK, $397.36) over the next 12 months or so. Wall Street's average price target stands at $514.89. That gives shares in the world's largest asset manager - responsible for BlackRock mutual and closed-end funds, as well as iShares exchange-traded funds - implied upside of almost 30%.

Meanwhile, earnings are forecast to grow at an average annual pace of more than 10%, and the stock trades at a forward-looking price-to-earnings ratio of 12.7. It's clear Wall Street thinks BlackRock is a bargain at current levels; seven analysts rate BLK at Strong Buy, seven call it a Buy and four say it's a Hold.

Wells Fargo (WFC) in March lowered its price target on BlackRock to $490 from $590 due to plunging global equity markets. But the bank reaffirmed its Overweight (equivalent of Buy) rating on BLK.

Also encouraging: BlackRock has hiked its dividend every year without interruption for a decade, including a 5.4% improvement announced back in January.

SEE ALSO: European Dividend Aristocrats: 41 Top-Flight International Dividend Stocks

Bristol-Myers Squibb

Getty Images


Market value: $110.1 billion

Dividend yield: 3.7%

Analysts' average rating: 1.83

Bristol-Myers Squibb (BMY, $48.79) works well for investors looking for income and defense. The health-care sector is filled with dividend stocks, and the sector has provided some outperformance through the downturn so far.

BMY shares, in specific, have beaten the S&P 500 by about 3 percentage points in the decline, and they've lost only about 2% over the past 52 weeks vs. a decline of 14% for the index.

Analysts look forward to the company's new-found strength now that it completed its $74 billion merger with fellow pharmaceutical giant Celgene (CELG). Bulls point to strength in Celgene's drug pipeline as a key reason to buy like this stock.

Acquisitions have served BMY well since Bristol-Myers merged with Squibb three decades ago. A long track record of successful acquisitions has kept the pharma company's pipeline primed with big-name drugs over the years. Among the better-known names today are Coumadin, a blood thinner, and Glucophage, for Type 2 diabetes.

Bank of America Merrill Lynch rates shares at Buy, citing the stock's "particularly attractive." More importantly, BofA says shares are oversold in the midst of coronavirus panic.

SEE ALSO: The Best and Worst Presidents (According to the Stock Market)

McDonald's

Getty Images


Market value: $111.4 billion

Dividend yield: 3.3%

Analysts' average rating: 1.8

The world's largest hamburger chain also happens to be a dividend stalwart. Changing consumer tastes will always be a risk, but McDonald's (MCD, $149.50) dividend dates back to 1976 and has gone up every year since. That's the power of being a consumer giant that has been able to adjust itself to changing consumer tastes without losing its core.

McDonald's has closed its dining rooms to customers because of the coronavirus outbreak, but continues to offer take-out, drive-thru and delivery services.

"(Hold-rated) McDonald's is enjoying sales momentum in domestic and international markets, and has essentially completed a business model transformation that should produce more predictable earnings and higher cash flow conversion," Stifel wrote on March 6.

And again, you can't beat MCD for dividend reliability. McDonald's is one of 64 S&P 500 dividend stocks that have raised their payouts every year for at least a quarter-century. MCD last improved its dividend by 8%, to $1.25 per share, in September. That marked its 43rd consecutive annual increase.

SEE ALSO: How to Invest in This Bear Market

Medtronic

Getty Images


Market value: $106.2 billion

Dividend yield: 2.7%

Analysts' average rating: 1.79

Medtronic (MDT, $79.22) is one of a few coronavirus plays among these top 25 dividend stocks, and it has gone into overdrive as the world battles the spread of COVID-19.

The company is one of the world's largest makers of medical devices, holding more than 4,600 patents on products ranging from insulin pumps for diabetics to stents used by cardiac surgeons. Look around a hospital or doctor's office - in the U.S. or in about 160 other countries - and there's a good chance you'll see Medtronic's products.

Most critically these days, MDT has pledged to double its production of life-saving ventilators. Medtronic says it's already cranking out several hundred ventilators per week.

MDT is focused on the health of its shareholders as well as its patients: Medtronic has been steadily increasing its dividend every year for more than four decades, making it a member of the S&P Dividend Aristocrats.

Credit Suisse maintains its Outperform rating despite the virus disrupting elective surgery and other procedures. Analysts expect average annual earnings growth of 9% over the next five years.

SEE ALSO: 5 Safe-Haven Stocks to Buy on Broader Market Weakness

Tyson Foods

Getty Images


Market value: $19.8 billion

Dividend yield: 3.1%

Analysts' average rating: 1.79

Tyson Foods (TSN, $54.21) is another company experiencing a huge surge in demand because of the outbreak. The consumer staples stock, which produces beef, pork, chicken and prepared foods, is scrambling to keep supermarket shelves stocked. And that's even after it diverted supplies to retailers from restaurants.

Tyson CEO Noel White said the company is up to the challenge.

"Once we are able to replenish supplies ... then I think that we'll be back in better equilibrium between supply and demand," the CEO told Reuters on March 19.

It's hard to find stocks that Wall Street feels good about these days, but Tyson is one of the few. Six analysts surveyed by S&P Global Market Intelligence rate the stock at Strong Buy, five say Buy and three call it a Hold. They expect average annual growth of 11% over the next five years, which compares well to a thin forward-looking P/E of just 10.

Federal Realty Investment Trust

Getty Images


Market value: $5.7 billion

Dividend yield: 5.6%

Analysts' average rating: 1.79

Federal Realty Investment Trust (FRT, $75.53) is a REIT that owns retail and mixed-use real estate across 12 states, as well as the District of Columbia. Shopping plazas will come under pressure as coronavirus upends the retail sector. However, mixed-use properties should fare better.

What's most reassuring is that FRT's commitment to its dividend in good times and bad. The REIT has hiked its payout every year for more than half a century. Federal Realty Investment Trust has registered roughly 59% dividend growth over the past decade, including a 2.9% improvement to the cash distribution announced in June 2019.

A couple of analysts have lowered their price targets on the stock, but they remain largely bullish, at 10 Strong Buys, 3 Buys, 6 Holds and no bearish calls.

SEE ALSO: 10 Solid Social Distancing Stocks to Buy

Assurant

Getty Images


Market value: $5.0 billion

Dividend yield: 3.0%

Analysts' average rating: 1.75

Assurant (AIZ, $83.44) missed Wall Street estimates when it reported fourth-quarter earnings in February, but it still posted an impressive bottom-line result. Net income spiked 192% from the year-ago quarter.

Fewer catastrophes helped boost the insurance company's bottom line. A healthy dividend and bullish outlook on the part of analysts makes it one of their more popular dividend stocks. Two analysts call it a Strong Buy, one says Buy and one says Hold.

Their average target price of $144.50 gives Assurant shares implied upside of about 66% in the next 12 to 18 months. Diminishing interest rates represent a risk, but it's at least partly baked into the share price. AIZ trades for just 7.8 times 2021 earnings.

Alexandria Real Estate Equities

Getty Images


Market value: $16.2 billion

Dividend yield: 3.1%

Analysts' average rating: 1.73

Alexandria Real Estate Equities (ARE, $132.00) specializes in urban office space - specifically, life science, technology and agricultural technology "clusters," which might be less at risk than other types of tenants. That could explain why shares have outperformed the S&P 500 by 7 percentage points throughout this bear run.

Dividends at least appear safe in the short-term. The company announced a $1.03-per-share dividend at the beginning of March, payable April 15, to shareholders of record as of March 31. So at least for now, it sees no reason to back down from its income payouts.

Of the 11 analysts covering the stock tracked by S&P Global Market Intelligence, six have it at Strong Buy, two say Buy and three rate it at Hold. Their compound annual growth forecast comes to 5.1% over the next three to five years. Better still, a price target of $177.18 gives ARE implied upside of almost 35% over the next 52 weeks or so.

SEE ALSO: The 20 Best ETFs to Buy for a Prosperous 2020

FirstEnergy

Getty Images


Market value: $19.5 billion

Dividend yield: 4.3%

Analysts' average rating: 1.71

FirstEnergy (FE, $35.99), an electric utility with 6 million customers in the Midwest and Mid-Atlantic regions, took a promising step last year. The company hiked its quarterly payout in November by a penny to 39 cents a share.

Why highlight such a modest dividend hike?

Because the dividend had been stuck at 36 cents per share for five years. In 2014, FirstEnergy clipped its payout by more than a third amid declining power prices. In late 2018, FirstEnergy management claimed that the company would be returning to growth and implied that higher dividends were a goal going forward.

Argus analyst Jacob Kilstein recently upgraded FE to Buy from Hold. BofA also thinks more highly of FirstEnergy than it once did, upgrading it from Buy to Neutral amid continued weakness in shares.

Utilities, while reliable dividend stocks, aren't known for rapid growth; the Street expects average annual earnings growth of only about 3% for the next five years. However, the dividend yield of more than 4% makes FE shares more palatable.

Merck

Getty Images


Market value: $179.4 billion

Dividend yield: 3.5%

Analysts' average rating: 1.7

Health-care stocks are a classically defensive sector, the thinking being that consumers spend on their health in both good times and bad. Merck (MRK, $70.73), a component of the Dow Jones Industrial Average, has suffered limited losses as it brings it considerable firepower to the pandemic fight.

The dividend stock is off just 13% since the market peak vs. the 29% decline in the blue-chip index. The gargantuan drugmaker is just one of many pharmaceutical companies and biotechnology firms scrambling to develop vaccines and treatments for COVID-19. Wall Street analysts see more upside ahead. Of the 20 analysts covering the stock tracked by S&P Global Market Intelligence, 11 rate it at Strong Buy, four say Buy and five call it a Hold.

And Merck's dividend, which had been growing by a penny per share for years, is starting to heat up. MRK upgraded its payouts by 14.6% in 2019, then followed that up with a nearly 11% improvement for 2020, with the next quarterly dividend scheduled to be paid April 7.

SEE ALSO: 16 Stocks Warren Buffett Is Buying and Selling

Prologis

Getty Images


Market value: $47.2 billion

Dividend yield: 3.6%

Analysts' average rating: 1.68

Prologis (PLD, $63.91), a real estate investment trust specializing in industrial properties and assets, is popular among Wall Street's pros thanks to its global footprint and favorable economics.

A quick snapshot: Prologis owns more than 960 million square feet of logistics real estate (think warehouses and distribution centers) across 19 countries on four continents. PLD is well situated to take advantage of the evolving retail economy, in which companies increasingly must distribute directly to consumers rather than brick-and-mortar retail stores.

Stifel, which has shares at Buy, notes that "industrial fundamentals within the U.S. and internationally remain strong," and "as the largest industrial REIT globally and with a deep team in the U.S. and abroad, it is well positioned to execute on all fronts with a high degree of selectivity."

Analysts expect Prologis, which recently completed its $12.6 billion acquisition of competitor Liberty Property Trust (LPT), to grow its profits by an average of 5.2% annually over the next three to five years.

"A successful track record of integrating large acquisitions is another core competency of this best-in-class management team and gives us confidence in reiterating our Buy rating," Deutsche Bank analysts write.

Comcast

Getty Images


Market value: $163.6 billion

Dividend yield: 2.6%

Analysts' average rating: 1.67

Cable, broadband and media giant Comcast (CMCSA, $35.94) has 20 Strong Buy ratings from Wall Street analysts, putting it high among these top 25 dividend stocks.

But that might not last long.

So far, the Olympics are still on. But if they're canceled by August, that will really hurt revenue. The shortened NHL season is also hurting the top line. Analysts figure that Comcast's Universal Studios parks in the U.S. will be closed for at least a month. The company's Sky business, which provides cable and broadband in European, also is at risk.

Credit Suisse recently maintained its Outperform rating on the cable giant, but reduced its target price by $4 per share to $51 based on projected hits to earnings.

"While our new assumptions carry a high degree of uncertainty given the rapidly changing backdrop, we felt the Parks closures, sporting event suspensions, Hollywood production delays and likely impacts on advertising needed to be addressed," Credit Suisse writes.

More optimistically, Credit Suisse notes that "Comcast is fortunate to be able to invest through this uncertainty, and at this time we expect its businesses will have recovered by 2021 or 2022."

SEE ALSO: How to Go to Cash

Dow

Getty Images


Market value: $20.9 billion

Dividend yield: 10.0%

Analysts' average rating: 1.67

Dow (DOW, $28.12) gained a place in the Dow Jones Industrial Average in 2017. That's when the specialty chemicals company merged with DuPont (DD). Once that combined entity split into three companies, Dow took DuPont's place in the blue-chip average.

Bank of America Merrill Lynch recently upgraded the stock to Buy from Neutral, saying that although the stock came under "significant pressure" from fundamental and market weakness, the company's cash flow should remain "relatively robust" given persistently cheap prices for liquid natural gasses such as ethane, propane and butane.

Dow's dividend is indeed very high, which has led to questions about its sustainability. But CEO Jim Fitterling told CNBC, "It's an artificially high dividend yield. We're in a much, much different financial position than we've been, and we did it deliberately to be ready to go into a down cycle after about a 10- to 11-year bull run in this market."

Of the 18 analysts covering the stock tracked by S&P Global Market Intelligence, six rate it at Strong Buy, two say Buy, nine call it a Hold and one says Sell. Their average price target of $39.76 gives Dow implied upside of more than 40% over the next 12 months.

NRG Energy

Getty Images


Market value: $6.0 billion

Dividend yield: 5.0%

Analysts' average rating: 1.64

Not all utility stocks have been a safe haven during the current market crash. NRG Energy (NRG, $23.95) is among them, having dropped 39% since the start of the bear market.

But NRG nonetheless is popular among the analyst crowd. The electric company gets six Strong Buy recommendations, three Buys and two Holds, according to S&P Global Market Intelligence.

Their current target price of $44.95 gives shares implied upside of 88% in the next year or so, although that's subject to change as analysts get more visibility into current economic conditions. However, on March 12, Morgan Stanley analysts raised their price target to $55 per share, from $54.

Wall Street expects annual average earnings growth of just 3.5% over the next five years out of NRG Energy, which makes sense given the low-growth nature of the utility sector. However, the stock adequately reflects that low growth rate, trading at less than times 2020 earnings.

SEE ALSO: 7 Great ETFs to Avoid the Havoc in Energy Stocks

Microchip Technology

Getty Images


Market value: $14.5 billion

Dividend yield: 2.4%

Analysts' average rating: 1.61

It's not yet clear where semiconductor stocks like Microchip Technology (MCHP, $60.56) are headed. Rosenblatt Securities recently cut its price target on MCHP to $120 from $132 after the company gave a downbeat outlook for the March-quarter revenue due to impacts from the COVID-19 outbreak.

Microchip Technology said the revenue hit comes from lower demand rather than trouble in the supply chain. Rosenblatt said the roughly 5% cut to expectations for the March quarter was about what it expected. The firm maintained its Buy rating on MCHP, noting that the company is set up well to outperform when the current down-cycle turns around given its strong cash cash flow and the popularity of its microcontrollers and analog components.

Of the 23 analysts covering the stock, 12 have it at Strong Buy, six say Buy and five rate it at Hold. They forecast average annual earnings growth of more than 12% over the next five years. More impressive still is the potential upside of nearly 84% implied by an average price target of $111.68. That's high praise for a company that belongs to Wall Street's hardest-hit sector right now.

Pioneer Natural Resources

Getty Images


Market value: $10.0 billion

Dividend yield: 3.6%

Analysts' average rating: 1.53

Analysts remain bullish on Pioneer Natural Resources (PXD, $60.37) as the oil and gas company cut capital expenditures for this year by 45%. Even better, it expects to generate $500 million in free cash flow, which can be used to fund the dividend. PXD was actually cash-flow negative last year.

"PXD offers investors a defensive-oriented investment," says Stifel, which rates the stock at Buy. "(Its) unmatched depth of low-cost inventory and balance sheet allow it to compete favorably in both mild and moderate recovery case scenarios."

Stifel adds that PXD has the best debt profile of its all its competitors operating in Texas's Permian Basin. "Successful cost management and execution in 2019 lay the foundation for a strong 2020."

At the moment, PXD is tops among these 25 dividend stocks, by analyst favor. Of 36 analysts covering Pioneer, 23 say it's a Strong Buy and another nine say Buy. That's versus just three Holds and one Strong Sell.

SEE ALSO: 14 Robo Advisers: Which Is the Best for You?

EDITOR'S PICKS

Copyright 2020 The Kiplinger Washington Editors