Top Wall Street analysts like these dividend-paying energy stocks

Fears of a potential recession and anxiety over tariff policy are weighing on the markets, but dividend stocks can help steady investors’ portfolios.

Top Wall Street analysts help identify companies that can withstand short-term challenges and generate solid cash flows, allowing them to consistently pay solid dividends.

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

Midstream energy company Energy Transfer (ET) is this week’s first dividend pick. The company has a diversified portfolio of energy assets in the U.S., with more than 130,000 miles of pipeline and related energy infrastructure.

In February, ET paid a quarterly cash distribution of $0.3250 per common unit, reflecting a 3.2% year-over-year increase. The stock offers a dividend yield of 7.5%.

Energy Transfer is scheduled to announce its first-quarter results on May 6. In her Q1 preview on the U.S. midstream sector, RBC Capital analyst Elvira Scotto named Energy Transfer as one of the companies she favors in this space. The analyst contends that the recent pullback in the stocks in RBC’s midstream coverage universe seems “overdone given the highly contracted and fee-based nature of midstream businesses.”

Scotto thinks that ET’s commentary about benefits from Waha price spreads (the price difference between natural gas traded at the Waha Hub in the Permian Basin and the benchmark Henry Hub price) could be one of the key drivers. She also expects ET stock to gain from any updates on potential data center/artificial intelligence-driven projects. The analyst added that management’s comments about export markets, mainly China, due to the trade war, will also impact investor sentiment.

The analyst is bullish on Energy Transfer due to its diversified cash flow streams across hydrocarbons and basins, including a significant amount of fee-based cash flow. Scotto expects ET’s cash flow growth, coupled with a solid balance sheet, to boost the cash returns to unit holders. She thinks that ET stock has an attractive valuation with limited downside. Overall, Scotto reaffirmed a buy rating on ET stock but slightly lowered the price target to $22 from $23 due to market uncertainty.

Scotto ranks No. 24 among more than 9,400 analysts tracked by TipRanks. Her ratings have been successful 67% of the time, delivering an average return of 18.1%. See Energy Transfer Ownership Structure on TipRanks.

Another midstream energy player that Scotto is bullish on is The Williams Companies (WMB). The company is set to announce its results for the first quarter of 2025 on May 5. Recently, WMB raised its dividend by 5.3% to $2.00 on an annualized basis for 2025. WMB offers a dividend yield of 3.4%.

Ahead of the Q1 results, Scotto listed several potential key drivers for WMB stock, including long-term AI/data center growth opportunities, dry gas basin activity, marketing segment results and the timing of growth projects coming online.

“We think investors favor WMB’s natural gas focused operations currently as the impact to natural gas demand is lower vs crude oil in a downturn given the underlying demand support from increasing LNG exports and AI/datacenters,” said Scotto.

Scotto reaffirmed a buy rating on WMB stock with a price target of $63. The analyst expects continued strong volumes across Williams’ segments, though some volume headwinds may persist in the Northeast segment. Scotto expects a solid quarter for WMB’s Sequent business due to weather-led storage opportunities.

Overall, Scotto is optimistic about WMB executing on its backlog of growth projects and bolstering its balance sheet. With a long-term horizon, the analyst expects Williams to remain comfortably within investment-grade credit metrics through her forecast period and keep its dividend intact. See Williams Technical Analysis on TipRanks.

Diamondback Energy (FANG) is focused on the onshore oil and natural gas reserves in the Permian Basin. In February, the company announced an 11% hike in its annual base dividend to $4 per share. FANG offers a dividend yield of 4.5%.

Ahead of the company’s first-quarter results scheduled to be announced in early May, JPMorgan analyst Arun Jayaram reiterated a buy rating on FANG stock and slightly reduced the price target to $166 from $167. The analyst expects the company’s Q1 2025 results to be relatively in line with the Street’s estimates. Jayaram expects FANG to report Q1 cash flow per share (CFPS) of $8.12 compared to the Street’s estimates of $8.09.

Despite the volatility in commodity prices, Jayaram doesn’t expect any changes to FANG’s maintenance capital plan, at least in the near term, with operations continuing to be on track following the Double Eagle acquisition. The analyst also noted solid well productivity trends from Diamondback’s projects that turned-in-line in 2024, which should provide additional capital efficiency tailwinds.

Jayaram expects FANG to generate free cash flow (FCF) of about $1.4 billion, with cash returns comprising 90 cents per share in quarterly dividends and $437 million of share buybacks.

“FANG is a leader in capital efficiency among the E&Ps [exploration and production companies] and has one of the lowest FCF break-evens across the group,” the analyst said.

Jayaram ranks No. 943 among more than 9,400 analysts tracked by TipRanks. His ratings have been successful 49% of the time, delivering an average return of 6.2%. See Diamondback Energy Insider Trading on TipRanks.