With stock market volatility expected to continue over the next several months, investors are searching for income. In fact, dividend stocks have been outperforming the broader market. The Vanguard Dividend Appreciation Index Fund ETF has a total return of -5.7% over the last 12 months, including reinvested dividends, while the S & P 500 ‘s total return is -14.6% during the same time period. VIG 1Y mountain Vanguard Dividend Appreciation Index Fund ETF shares over the past year Meanwhile, there could be another year of record dividend returns . In 2022, S & P companies shelled out a record $564 billion in dividends, a 10% increase over 2021, according to S & P Global. With that in mind, CNBC Pro looked for stocks in the Vanguard Dividend Appreciation Index Fund ETF that are loved by analysts. The companies are rated buy by at least 70% of the analysts covering them. They also have at least 10% upside reflected in their consensus price target, so there is some potential stock appreciation along with the yield. Both Cabot, a specialty chemicals and performance materials company, and First Merchants , a bank, are most loved by Wall Street, with all the analysts covering the stocks rating them a buy. Cabot, which yields 2.1%, has nearly 22% upside to the average price target. First Merchants, along with its 3.1% yield, has nearly 18% upside to its consensus price target. Of all names on the list, Broadcom has the highest dividend yield, at 3.2%. Along with that yield, the stock has 14% upside to the average analyst price target. Some 71% of the analysts covering the stock rate it a buy. Even a recent Bloomberg report that Apple will replace Broadcom’s chip by 2025 with its own chip hasn’t appeared to have shaken analysts’ confidence. Bank of America’s Vivek Arya wrote in a note earlier this week that the news is a modest negative for the stock. Broadcom’s profitability and growth are instead more dependent on its unique data center/enterprise networking assets and highly resilient infrastructure software assets, he said. Xbox and Windows software maker Microsoft also made the cut, with a 1.2% yield and 21% upside to the average analyst price target. Some 75% of analysts covering Microsoft rate it buy. Citigroup is one of the firms that like the stock, naming it a top pick for 2023 . “While challenges will prevail for growth-at-all-costs names, we believe companies that show good sales efficiency with large market opportunities” are among the best positioned, analyst Tyler Radke wrote in a note Thursday. Nearly 74% of the analysts covering NextEra Energy have a buy rating on the the Florida utility, which sports a 2% dividend yield and offers 14% upside based on the average analyst price target. In its 2023 utilities outlook, Mizuho said its buy rating reflects NextEra’s premium utility business in Florida, as well as its unregulated renewable generation business. “We believe the combination of NEE’s growth prospects and renewable opportunities warrant its group leading valuation and will continue to drive NEE’s outperformance versus the group,” the firm said. Last, payments company Visa has a 0.8% dividend yield and 12% upside, based on the consensus price target. Some 70% of analysts covering the stock rate it a buy. Visa was recently upgraded by Keybanc to overweight from sector weight. The Wall Street firm said Visa and Mastercard will benefit as fintech grows to an embedded model used by businesses, consumers, merchants and issuers. — CNBC’s Michael Bloom contributed reporting.
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