Ares Capital, Sixth Street Specialty Lending, and AllianceBernstein are 3 Best Dividend Stocks to buy as per Wall Street analysts in May 2024. We used the TipRanks’ Best Dividend Stocks tool to discover these three stocks that carry above-sector average dividend yields and are highly favored by analysts. What’s even better, all three stocks carry a “Perfect 10” Smart Score on TipRanks, meaning that these companies are highly likely to outperform market expectations.
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Investing in dividend-paying stocks is one of the best alternatives to aptly diversify your portfolio and earn regular income. Dividend stocks reward shareholders by regularly paying dividends from the company’s earnings. These companies usually have a well-established business line and consistent track record, which supports their dividend payments. Let’s dive right into the three stocks chosen today, all belonging to the Finance sector.
#1 Ares Capital Corp. (NASDAQ:ARCC)
Ares Capital is a specialty finance company that provides direct loans and other investments (senior debt and equity) to private middle-market companies across the U.S. It invests only in high investment-grade companies, enabling them to generate attractive current income and potential capital appreciation for investors.
ARCC pays a regular quarterly dividend of $0.48 per share, reflecting a high yield of 8.99%. In Q1 FY24, ARCC’s total investment income rose 13.4% year-over-year. Core earnings per share (EPS) increased to $0.59, up by two cents compared to the prior-year quarter. Importantly, portfolio investments at fair value grew by 1.1% to $23.12 billion compared to the end of 2023.
Is ARCC a Good Stock to Buy?
On TipRanks, ARCC stock has a Strong Buy consensus rating based on seven Buys and two Hold ratings. The average Ares Capital Corp. price target of $21.94 implies 2.8% upside potential from current levels. In the past year, ARCC shares have gained 13%.
#2 Sixth Street Specialty Lending (NYSE:TSLX)
As the name suggests, Sixth Street Specialty Lending is a specialty finance company lending to U.S.-domiciled middle-market companies to generate current income. TSLX mostly provides senior secured loans and, to a lesser extent, mezzanine and unsecured loans and investments in corporate bonds and equity securities.
TSLX offers a lucrative dividend yield of 8.48%. The company declared a Q2 base dividend of $0.46 per share and a Q1 supplemental dividend of $0.06 per share, both payable in June. In the first quarter of Fiscal 2024, Sixth Street’s total investment income jumped 22.1% year-over-year, while adjusted EPS declined by 22.4% to $0.52. Meanwhile, investments at fair value as of March 31, 2024, increased by 15.8% to $3.38 billion.
Is TSLX Stock a Buy?
With five unanimous Buys, TSLX stock has a Strong Buy consensus rating on TipRanks. The average Sixth Street Specialty Lending price target of $22.70 implies 5.1% upside potential from current levels. TSLX shares have gained 18% in the past year.
#3 AllianceBernstein Holding LP (NYSE:AB)
AllianceBernstein is a global investment firm offering asset management and private wealth management solutions to clients ranging from individual investors to large institutions.
So far in 2024, AB stock has paid $1.50 in dividends, with its most recent dividend of $0.73 per share paid on May 3. The dividends reflect a current yield of 7.97%.
In Q1 FY24, AB’s net revenues grew 7.8% year-over-year to $1.10 billion, while adjusted EPS rose 10.6% year-over-year to $0.73 per share. Interestingly, AB’s quarter-end assets under management (AUM) reached $758.7 billion, up 12.2% compared to March 31, 2023.
Is AB a Good Investment?
With three Buys and one Hold recommendation, AB stock has a Strong Buy consensus rating on TipRanks. Also, the average AllianceBernstein Holding price target of $40.25 implies 20.2% upside potential from current levels. In the past year, AB shares have lost 3.7% of their value.
Ending Thoughts
Investors can consider the above three dividend stocks to enhance their portfolio returns and realize share price appreciation potential. The three companies have a Strong Buy consensus rating and a “Perfect 10” Smart Score, implying they are highly lucrative investments.
