Warren Buffett, the legendary Oracle of Omaha and arguably the most famous investor to have ever lived, owes a great deal of his success to his buy-and-hold approach that tends to focus on blue-chip dividend stocks. Berkshire Hathaway's (NYSE:BRKa) huge positions in dividend stalwarts like Bank of America (NYSE:BAC) and Apple (NASDAQ:AAPL) earn the company billions of dollars in dividend distributions annually.
Stable dividend stocks can be a strong defensive maneuver during periods of market turbulence—these companies tend to be well-established and less likely to falter amidst broader volatility—and the passive income they provide through distributions can be reinvested to compound gains. Still, a company's dividend metrics provide just a portion of an investor's broader view of that firm as a potential target for investment. That's why it may be helpful for dividend-seeking investors to also consider what Wall Street more broadly thinks about a particular stock before jumping in.
In the area of dividend stocks, three firms standing out for having a large number of recent Buy ratings from Wall Street analysts include Motorola Solutions (NYSE:MSI), Nike (NYSE:NKE), and Townsquare Media (NYSE:TSQ).
Motorola Solutions: Stellar Demand in a Growing Industry
Motorola Solutions is a telecom company specializing in radio systems, security, and surveillance technology, and control systems and software. It operates independently of the Motorola smartphone brand, with the two companies having split in 2011.
Motorola Solutions' recent performance impressed investors: in the third quarter of 2024, it reported a 9.2% year-over-year increase in revenue and growing operating cash flow.
Driving this performance is the strong demand for the company's security products, which have a range of applications, including policework, retail shopping, border security, and more. Fortunately for Motorola, this demand shows no signs of slowing and, in fact, is likely to increase in the short term.
With eight out of nine analysts rating Motorola Solutions a Buy, the company's consensus price target of $504.88 is more than 9% above current levels as of January 2, 2025. This upside potential exists despite the fact that shares of MSI are already up more than 48% in the year leading to that date as well.
Nike: Tough Times, But a Turnaround Possible
Nike had a tough 2024, with shares dropping by almost 30% in the year starting January 2, 2024. The stock price plunged amid an unsuccessful direct-to-consumer effort, poor sales in Asian markets, and reduced consumer spending in the U.S.
Heading into 2025, though, there are reasons to be optimistic. Former CEO Elliot Hill returned late in the year, helping to beat consensus estimates on EPS for his first quarterback with the company. Still, the firm expects it to take time to rebuild—it forecasts sharp revenue declines for the current quarter while Hill aims to restore its business with wholesalers and return to a focus on top brands.
All of this is to say that now might be a time for investors to buy the dip. Nike remains one of the world's leading athletic and sportswear companies, despite recent challenges.
The firm retains its power as a dividend player, with a payout ratio above 49% and a dividend yield of 2.13%. Given the recent drop in share price, analysts see Nike shares rising nearly 19% to reach a consensus price target of $89.58.
Townsquare Media: Revenue Picks Up as SummitMedia Partnership Takes Off
Townsquare Media is a small-cap digital media firm with more than 80% in upside potential, according to analyst ratings. Following a period of share price volatility, the company recently announced its return to total and digital revenue growth in its November 2024 earnings report.
More importantly, the company's partnership with SummitMedia, announced in October, is likely to bear fruit in 2025.
The partnership expands Townsquare's reach into new markets, including Honolulu, Birmingham, Omaha, and Louisville.
Townsquare remains likely undervalued, based on a P/S ratio of 0.3. If it is able to continue to grow revenue, it will also have an easier time maintaining its impressive dividend payout ratio of 8.5%.
While not as stable a play as Motorola or Nike above, Townsquare nonetheless offers some attractive prospects for dividend investors.