Top Wall Street analysts advise purchasing these dividend stocks for increased returns.

The unpredictable stock market is causing investors to struggle in selecting the best investments.

It is more advantageous to have a long-term investment perspective and seek out stocks that provide both secure dividends and capital growth.

According to TipRanks, Wall Street's top experts have identified five attractive dividend stocks.

Ares Capital

This week, we will examine a high-dividend yield stock (ARCC), which is a business development company that provides various financing options to the middle market. The company's third-quarter earnings report showed a beat, thanks to the rise in interest rates and the maintenance of stable credit quality.

The company declared a dividend of 48 cents per share for the fourth quarter, payable on Dec. 28. ARCC offers a dividend yield of 9.8%.

Kenneth Lee, an RBC Capital analyst, commented on the Q3 results and stated that credit performance remains good, with loans on non-accrual status declining slightly to 1.2% of the portfolio on an amortized cost basis. However, he believes that non-accruals may increase next year.

The analyst emphasized other strengths of Ares Capital, such as portfolio diversification, and believes that the company's dividends are secure due to its strong earnings per share and potential net realized gains.

Lee maintained a buy rating on ARCC stock with a price target of $21, stating, "We remain confident in ARCC's ability to manage risks, pay dividends, and maintain a competitive edge."

Among more than 8,500 analysts tracked by TipRanks, Lee ranks No. 251. His ratings have been profitable 57% of the time, with each delivering an average return of 12.6%. (See ARCC Stock Charts on TipRanks)

Citigroup

The next item on this week's list is banking giant C. In October, the bank reported better-than-expected results for the third quarter, driven by the strength of its institutional clients and personal banking units. Citi recently announced a major restructuring that would streamline its operations and improve its business.

The bank declared a quarterly dividend of 53 cents per share, payable on November 22. Citi's dividend yield is currently 5%.

James Fotheringham, a BMO Capital analyst, pointed out that Citi's Q3 results were due to higher-than-expected revenue, lower operating expenses, and reduced credit costs.

The analyst revised his core earnings per share projections for 2023, 2024, and 2025 by 11%, 6%, and 3%, respectively, due to lower credit costs and a slower decline in net interest margin.

Fotheringham raised his price target for the stock to $66 from $61 and maintained a buy rating, stating that "C is our top pick among large-cap banks; shares trade at the largest discount (by far) to TCE among the money-center banks."

On TipRanks, Fotheringham ranks 372nd among over 8,500 analysts, with 56% of his ratings being profitable and each generating an average return of 9.4%. (Source: Citigroup Blogger Opinions & Sentiment on TipRanks)

McDonald’s

McDonald's (MCD) surpassed analysts' expectations in its third-quarter report, thanks to increased prices that offset declining traffic at U.S. restaurants.

In October, MCD declared a 10% increase in its quarterly dividend to $1.67 per share, payable on December 15. This marks the 47th consecutive year of dividend increases by the company. The dividend yield is currently 2.5%.

Peter Saleh, a BTIG analyst ranked 667th out of over 8,500 analysts on TipRanks, pointed out that the sales and earnings growth in MCD's Q3 results were accompanied by cautious remarks about U.S. traffic. Although traffic had decreased slightly due to lower-income customers' reduced frequency and pressure in the "breakfast daypart," the upside in sales and earnings was still present.

The analyst observed that MCD still has a strong presence in various regions and is better positioned than its competitors. In the future, Saleh anticipates that MCD will accelerate its expansion in the US, with approximately 250 units planned for next year. He also expects the company to prioritize value and digital engagement, as well as expand its automated order-taking technology in 2024.

Saleh stated that McDonald's is considered one of the world's strongest restaurant concepts, currently in the recovery phase of a multi-year sales trend.

McDonald's stock has a buy rating from Saleh with a price target of $300. Saleh's ratings have been successful 52% of the time, with each rating delivering an average return of 7.9%. (Check McDonald's Financial Statements on TipRanks)

AT&T

Telecommunications giant T reported strong subscriber growth in the third quarter due to promotions and phone upgrades, and also increased its full-year free cash flow guidance to approximately $16.5 billion from $16 billion. Additionally, AT&T provides an appealing dividend yield of 7%.

On October 26th, Ivan Feinseth, an analyst at Tigress Financial Partners, maintained a buy rating on AT&T stock with a price target of $28. Feinseth emphasized that the increase in Q3 subscribers and cash flow signify a significant shift in AT&T's business performance trends.

The company's revenue, cash flow, and profitability will experience significant growth in 2023 and beyond, driven by the ongoing 5G and broadband rollout in business communications.

Feinseth stated that AT&T will use its 5G high-speed fiber network to boost subscriber growth and improve its Edge Computing capabilities.

In Q3 2023, AT&T reduced its debt by over $3 billion, which will decrease interest expense and increase investment in its connectivity business. The analyst predicts that the company will continue to optimize its dividend payout ratio, allowing it to support ongoing investments while returning cash to shareholders.

Feinseth ranks 453rd among over 8,500 analysts on TipRanks, with 54% of his ratings being successful and generating an average return of 8.2%. (See AT&T Hedge Fund Trading Activity on TipRanks)

Target

Feinseth is also optimistic about another dividend stock: big-box retailer (TGT). The analyst believes that short-term challenges present a favorable opportunity to purchase the stock, as the company is well-equipped to generate revenue growth and profitability in the long run while increasing shareholder value.

The analyst anticipates that Target's numerous advantages, such as its devoted customer base, efficient operations, and improved delivery services, will enable it to overcome ongoing consumer challenges, marketing blunders, and inventory shortages.

Target is expanding its product offerings and footprint by adding new products and opening new stores while remodeling existing ones. (See Target Insider Trading Activity on TipRanks)

Since 1971, TGT has increased its annual dividend, with a 2% increase in June 2023 to $1.10 per share, following a 20% increase in June 2022 to $1.08 per share. The company's dividend yield is currently 3.9%.

Feinseth reduced TGT's price target from $215 to $180 due to near-term challenges but kept a buy rating, stating that consumer spending trends' increasing value focus, inflationary pressures' moderation, and input costs' moderation will drive a reacceleration in Business Performance trends.