2 Energy Dividend Stocks Yielding 6% to Pick Now

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Dividend stocks are shares of companies that pay out a portion of their earnings to shareholders as dividends. Companies that increase their dividends over time are especially appealing to retirees and income-focused investors.

Midstream energy companies Enterprise Products Partners and Enbridge have proven to be credible dividend stocks - not only by paying a high yield, but also by consistently increasing dividends. Enterprise has a forward dividend yield of 6.6%, while Enbridge offers 6.1%, compared to the energy sector average of about 4.2%.

Both companies have earned the title of Dividend Aristocrats, which is given to S&P 500 Index companies that have increased their dividends for at least 25 consecutive years. These stocks are sought-after by investors because a company that pays and consistently increases dividends typically indicates strong cash flow, profitability, and sound management.

While these mature companies have moderate growth potential, they are better suited to investors seeking consistent income and exposure to the energy infrastructure sub-sector.

Dividend Stock No 1: Enterprise Products Partners

Enterprise Products Partners has long been a favorite among income-focused investors due to its high and consistent distribution yield. With its vast portfolio of pipelines, storage facilities, and processing plants, EPD plays a critical role in transporting and storing oil, natural gas (NGF25), and petrochemical products.

So far this year, EPD shares have gained 22.8%, compared to the S&P 500's gain of 24.7%.

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EPD manages more than 50,000 miles of pipelines and nearly 300 million barrels of storage capacity for natural gas liquids (NGLs), crude oil (CLF25), petrochemicals, and refined products. The majority of EPD's revenue comes from fee-based contracts, which ensure predictable cash flows and allow the company to pay consistent dividends.

In the third quarter, distributable cash flow (DCF) increased 5% to $2 billion. Net income also rose 8% to $0.65 per share. Consistent growth in earnings and cash flows also allowed the company to increase its quarterly dividend by 5.0% to $0.525 per share in the third quarter. The company has been increasing dividends for the past 27 years.

As a master limited partnership (MLP), EPD’s forward dividend payout ratio is relatively high, but sustainable. Analysts predict EPD’s earnings could increase by 6% in 2024, followed by another 6.8% in 2025.

The company also generated an adjusted free cash flow of $943 million. A hefty free cash flow balance should also help the company reduce its debt, as its debt-to-equity ratio is quite high at 1.09.

Overall, Wall Street considers EPD stock to be a "strong buy." Out of the 15 analysts who cover EPD, 12 recommend a "strong buy," one says it’s a “moderate buy,” and two recommend a "hold." The average price target of $33.94 set by analysts represents a potential 5% increase from current levels. Its high target price of $37 suggests the stock could climb by another 14.4% over the next 12 months.

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Dividend Stock No 2: Enbridge

Enbridge , one of North America's leading energy infrastructure companies, has long been a favorite of dividend-oriented investors. Aside from pipelines, its diverse portfolio includes natural gas utilities, storage facilities, and renewable energy projects. The company generates predictable cash flows due to its fee-based business model, which isn’t heavily exposed to volatile commodity prices.

ENB stock has gained 20.7% year-to-date, compared to the overall market.

In the third quarter, adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) increased by 8% year on year to $4.2 billion. The company's distributable cash flow (DCF), which it uses to pay dividends, stood at $2.6 billion, the same as the previous year. However, adjusted earnings per share were lower at $0.55, compared to $0.62 in Q3 2023.

For the full year 2024, Enbridge intends to achieve the high end of its EBITDA target of $17.7 billion to $18.3 billion. DCF could fall in the $5.40 to $5.80 range per share.

Enbridge has made several strategic acquisitions to improve its natural gas transmission and storage capabilities, thereby strengthening its market position. Recently, the company completed the acquisition of three U.S. natural gas utilities announced in September last year.

CEO Greg Ebel believes these three are an excellent fit for “Enbridge's existing low-risk business model, offer reliable cash flow, and come with embedded quick-cycle growth opportunities.”

It also completed the acquisition of Public Service Company of North Carolina from Dominion Energy for $3.2 billion. Furthermore, it has collaborated with Microsoft to use artificial intelligence (AI) to "drive significant advancements in safety, emissions reduction, and asset optimization across its operations."

While these acquisitions and investments will increase future earnings and dividends, they also contribute to high debt levels. Its debt-to-equity ratio is high at 1.39, indicating that the company relies heavily on debt to fund its operations. However, its interest coverage ratio of 3.07 indicates that the company can repay the interest on its debts. Analysts predict a 3.4% drop in earnings in 2024, followed by an 8.6% increase in 2025.

For long-term investors, Enbridge offers a mix of income stability and moderate growth potential. Enbridge has increased its dividends for the past 29 years, though its elevated payout ratio is worth noting.

Overall, Wall Street has rated Enbridge stock a "moderate buy.” Of the 16 analysts in coverage, five recommend a "strong buy,” two rate it a "moderate buy,” eight say it’s a “hold,” and one rates it a “strong sell.” Enbridge stock has surpassed its average analyst target price of $42.76. Its Street-high price estimate of $48.45 implies an upside potential of 11.4% from current levels.

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On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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Enbridge Inc Price Target Raised to C$66.00/Share From C$60.00 by JP Morgan

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3 Reasons Adobe Stock is a Buy Despite a 19% Decline in a Year

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Adobe ADBE shares have declined 19.4% in the trailing 12 months, underperforming the broader Zacks Computer & Technology sector’s return of 32.9% and the Zacks Computer Software industry’s appreciation of 16.9%.

ADBE suffers from a challenging macroeconomic environment, which has negatively impacted the Digital Media segment, and intensifying competition in the generative AI (Gen AI) space.

However, Adobe’s prospects are expected to benefit from a strong demand for its creative products. Its Creative Cloud, Document Cloud and Adobe Experience Cloud products have been driving top-line growth.

ADBE’s strong positioning in the digital content and marketing industry, backed by its robust cloud-enabled products and growing GenAI capabilities, has been boosting its business prospects.

Rising subscription revenues and solid momentum across the mobile apps are major positives. Growth in emerging markets and robust online video creation demand remain tailwinds for Adobe.

For the fourth quarter of 2024, Adobe expects net new Annual Recurring Revenues in the Digital Media segment to be $550 million. Subscription revenues of Digital Experience are anticipated between $1.23 billion and $1.25 billion.

ADBE Lags Sector, Industry in a Year

Expanding GenAI-Powered Portfolio Aids ADBE’s Prospects

Adobe is riding on the solid momentum in its family of creative, Gen AI models, namely Firefly. It has been used to generate 13 billion images since March 2023 and is seeing rapid adoption by leading brands and enterprises.

Its unveiling of the Firefly Image 2 Model, Firefly Vector Model and Firefly Design Model to mark a significant advancement in its creative Gen AI model family, enhancing creative control, image quality and illustrator capabilities, is a major positive.

Adobe recently introduced the new Firefly Video model, which is a positive. With Firefly innovations and integrations, ADBE has exceeded 12 billion generations since the launch of Firefly. This is marked as an important milestone.

Enhanced AI Assistant to Boost ADBE’s Competitiveness

Adobe enhanced features of Acrobat AI Assistant to allow customers to ask questions, get insights, and create content from information across groups of PDFs and other document types, including Microsoft MSFT Word, PowerPoint and text files. It also introduced enhanced meeting transcript capabilities in AI Assistant.

Adobe’s growing efforts to expand content creation in Adobe Acrobat are noteworthy. It integrated Adobe Firefly image generation into its Edit PDF workflows. It has optimized AI Assistant in Acrobat to generate content fit for presentations, emails and other forms of communication.

Adobe also offers the Adobe Express Platform AI Assistant, which is capable of answering technical questions, automating tasks, simulating outcomes and generating audiences seamlessly.

The launch of Generative Remove in Adobe Lightroom, a powerful Firefly-backed tool that helps remove unwanted objects from any photo in a single click in a non-destructive manner, is a plus.

The introduction of Adobe Express for Enterprise, powered by Firefly Image Model 3, is driving the company’s momentum among various enterprises.

Strong Clientele Drives ADBE’s Growth

A solid portfolio and differentiated approach to AI are attracting an expanding universe of customers across Adobe’s segments.

International Business Machines IBM is one of the notable customers leveraging Adobe Firefly.

Adobe’s other key customer wins include Johnson & Johnson, Mayo Clinic, Home Depot, Dentsu, TD Bank, Newell Brands, Alphabet’s GOOGL Google, MediaMonks, Meta Platforms, U.S. Navy, PepsiCo, Estee Lauder, Disney, RedBull, Amazon, KPMG, U.S. Treasury Department and Charles Schwab.

These factors are expected to drive top-line growth. For the fourth quarter of fiscal 2024, Adobe projects total revenues between $5.50 billion and $5.55 billion.

Adobe expects Digital Media revenues between $4.09 billion and $4.12 billion. The Digital Experience segment’s revenues are expected between $1.36 billion and $1.38 billion.

Adobe expects non-GAAP earnings between $4.63 per share and $4.68 per share.

ADBE’s 2024 Estimate Revision Trend Positive

For 2024, the Zacks Consensus Estimate for earnings is pegged at $18.28 per share, up by a penny over the past 60 days. The figure indicates 13.75% year-over-year growth.

The Zacks Consensus Estimate for 2024 revenues is pegged at $21.44 billion, suggesting 10.46% growth over 2023.

The consensus mark for fourth-quarter fiscal 2024 earnings is currently pegged at $4.66 per share, unchanged over the past 60 days. The figure suggests 9.13% year-over-year growth.

The consensus mark for fourth-quarter 2024 revenues is pegged at $5.54 billion, suggesting 9.71% year-over-year growth.

Adobe Inc. Price and Consensus

Adobe Inc. price-consensus-chart | Adobe Inc. Quote

ADBE Stock Trades at a Premium

However, Adobe stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.

In terms of the forward 12-month Price/Sales, ADBE is trading at 9.27X, higher than the industry’s 7.86X.

Price/Sales Ratio (F12M)

Conclusion

Adobe’s deepening GenAI focus and innovative GenAI-powered portfolio presents a compelling opportunity for investors. We believe ADBE’s strong growth prospect justifies its premium valuation.

ADBE currently has a Zacks Rank #2 (Buy), which implies that investors should start accumulating the stock right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Snowflake Q3 Earnings Beat Estimates, Revenues Rise Y/Y, Stock Up

Zacks

Snowflake SNOW reported third-quarter fiscal 2025 non-GAAP earnings of 20 cents per share, beating the Zacks Consensus Estimate by 33.33%. The figure declined 20% year over year.

SNOW’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average earnings surprise being 35.39%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Revenues of $942.1 million beat the consensus mark by 4.82% and jumped 28.3% year over year. Americas, Europe, Middle East & Africa (EMEA), and Asia, Pacific & Japan (APJ) accounted for 79%, 16% and 5% of revenues, respectively.

Following third-quarter fiscal 2025 results, Snowflake shares were up 24.77% in pre-market trading. The company’s shares have lost 22.7% year to date against the Zacks Computer & Technology sector’s growth of 27.8%.

Snowflake Inc. Price, Consensus and EPS Surprise

Snowflake Inc. price-consensus-eps-surprise-chart | Snowflake Inc. Quote

SNOW shares are expected to benefit from a rich partner base. In the third quarter of fiscal 2025, Snowflake partnered with Microsoft MSFT and ServiceNow NOW to improve data interoperability, making it easier for customers to move data in and out of Snowflake and develop applications faster.

SNOW’s Top Line Rides on Product Revenue Growth

SNOW benefits from a strong portfolio with new capabilities, including Marketplace Listing Auto-Fulfillment & Monetization, account replication & failover, Query Acceleration Service, geospatial analytics, Snowpark and Snowpipe Streaming.

Snowpark contributed a significant portion toward SNOW’s top-line growth and is on track to be roughly 3% of total revenues.

In the third quarter of fiscal 2025, more than 3,200 accounts adopted SNOW’s AI and ML features, and approximately 500 accounts adopted Iceberg.

Snowflake’s product revenues in the fiscal third quarter were $900.3 million and accounted for 95.6% of total revenues. On a year-over-year basis, product revenues increased 28.9%.

Professional Services and other revenues contributed 4.4% to total revenues. The figure was $41.8 million, up 17.1% year over year.

Snowflake’s growing client base includes industry leaders like Disney, Accor, Comcast CMCSA, Chipotle, Kraft Heinz, NBC Universal, Sanofi and Toyota. Disney utilizes SNOW’s platform for in-park optimization.

In the fiscal third quarter, Snowflake witnessed a net revenue retention rate of 127% for existing customers, unchanged from the previous quarter and down from 135% reported in the year-ago quarter.

The company reported 20.33% year-over-year growth in the number of customers, reaching 10,618 in the reported quarter. It now has 542 customers with trailing 12-month product revenues greater than $1 million (up 25% year over year) and 754 Forbes Global 2000 customers (up 7.87% year over year).

SNOW remained acquisitive in the reported quarter. Its planned acquisition of Datavolo strengthens Snowflake’s platform for both structured and unstructured data, enhancing flexibility and simplifying data engineering workloads for customers.

SNOW’s Operating Expenses Rise Y/Y

In the third quarter of fiscal 2025, non-GAAP gross margin reduced 200 basis points (bps) year over year to 72.9%.

Total non-GAAP operating expenses were $628.3 million, up 31.4% from the prior-year quarter. As a percentage of revenues, the figure expanded to 66.7% from 65.1% in the year-ago quarter.

Sales and Marketing (S&M) expenses increased 26.6% year over year to $340.6 million. As a percentage of revenues, S&M expenses decreased 50 bps on a year-over-year basis to 36.2%.

Research & Development (R&D) expenses rose 41.4% year over year to $224.8 million. As a percentage of revenues, R&D expenses increased 220 bps on a year-over-year basis to 23.9%.

General & Administrative (G&A) expenses grew 25.9% year over year to $62.9 million. As a percentage of revenues, G&A expenses decreased 10 bps on a year over year basis to 6.7%.

Consequently, SNOW reported a non-GAAP operating income of $58.9 million, down 18.1% from the operating income of $71.9 million in the year-ago quarter.

SNOW’s Balance Sheet & Cash Flow

As of Oct. 31, 2024, Snowflake had cash, cash equivalents and short-term investments of $4.16 billion compared with $3.23 billion as of July 31, 2024.

The remaining performance obligations at the end of the third quarter of fiscal 2025 were $5.7 billion, up 55% year over year.

The non-GAAP adjusted free cash flow was $86.8 million in the reported quarter compared with the previous quarter’s $110.8 million.

Year to date, Snowflake has spent $1.9 billion to repurchase 14.8 million shares.

SNOW’s Q4 2025 Guidance

For the fourth quarter of fiscal 2025, Snowflake expects product revenues in the range of $906-$911 million. The projection range indicates year-over-year growth of approximately 23%.

For fiscal 2025, the company expects product revenues to increase 29% year over year to $3.43 billion.

The non-GAAP product gross margin is expected to be 76% and the non-GAAP operating margin is expected to be 5%.

The non-GAAP adjusted free cash flow margin is expected to be 26% in fiscal 2025.

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Snowflake currently carries a Zacks Rank #4 (Sell).

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Tuya Stock Plunges 32% Year to Date: Should You Buy the Dip?

Zacks

Tuya TUYA, a leading global provider of IoT development platforms, has seen its stock decline 32% year to date (YTD), significantly underperforming the Zacks Internet - Software industry’s return of 28.8%. The stock has also underperformed the Technology Select Sector SPDR Fund XLK ETF’s YTD return of 20.1%.

While the plunge raises concerns about Tuya’s near-term challenges, the long-term investment case appears compelling. Tuya’s strong fundamentals, growing market presence and strategic initiatives position it as a potential recovery play in the Internet of things (IoT) sector. Here’s why investors should consider buying the dip.

Tuya Inc. Sponsored ADR Price and Consensus

Tuya Inc. Sponsored ADR price-consensus-chart | Tuya Inc. Sponsored ADR Quote

Tuya’s Resilient Revenue Growth Amid Market Challenges

Tuya has demonstrated impressive resilience in maintaining revenue growth despite a challenging macroeconomic environment. In the third quarter of 2024, TUYA reported a 33.6% year-over-year increase in total revenues, reaching $81.6 million. While quarter-over-quarter growth decelerated, the year-over-year improvement highlights the company’s ability to adapt and scale amid economic headwinds. Tuya’s diversified revenue streams across IoT PaaS, SaaS, and smart device distribution provide a strong foundation for sustained growth.

Moreover, the company’s IoT PaaS segment, which constitutes its largest revenue driver, grew significantly, fueled by robust demand in North America and Europe. Tuya’s efforts to expand its geographic footprint have begun yielding results, mitigating some risks associated with its reliance on the Chinese market.

Tuya’s Strategic Contracts Bolster Long-Term Growth

In the third quarter, TUYA entered into definitive agreements globally, particularly in Europe and emerging markets, and expanded its developer community to 1.26 million registered developers.

A continuous flow of contracts is driving Tuya’s growth. The company concluded two fresh contracts in the third quarter with leading telecom operators in Thailand and Vietnam and is consistently receiving repeat orders from smart devices from existing customers who have already deployed its solutions. During the third quarter, it also grabbed a $1.3 million contract from Singapore’s Housing & Development Board, which underscores its growing presence in large-scale enterprise projects.

These contracts not only strengthen Tuya’s credibility but also open doors for further expansion into the burgeoning IoT market. Such contracts demonstrate TUYA’s ability to secure high-value deals and tap into rising digital transformation initiatives globally.

The Zacks Consensus Estimate for 2024 and 2025 indicates a strong double-digit revenue growth. The company’s earnings are also expected to increase year over year in both years.

Strategic Collaboration to Aid TUYA’s Prospects

TUYA is expected to benefit from its meaningful partnership agreements. The partnership with V2 Indonesia, the top solution provider in Indonesia, in June 2024 to jointly promote the deep integration of cutting-edge technologies is a notable development.

In July 2024, TUYA’s partnership with AiTAN, Thailand's premier smart solution provider, was a significant move. The collaboration was a remarkable step in their joint pursuit of creating cutting-edge smart solutions to elevate the smart living experience for commercial developers and household users across Thailand and broader Southeast Asia.

The latest partnership with Cerence to offer multi-lingual text-to-speech for its cloud developer platform, which is specifically tailored for two-wheel vehicles like motorcycles, e-bikes and more, was a positive move.

Tuya’s Competitive Edge in the IoT Ecosystem

Tuya stands out against rivals like Microsoft’s MSFT Azure IoT and Amazon’s AMZN AWS IoT Core by leveraging its scalable and AI-driven IoT development platform tailored for a broad spectrum of businesses. While competitors cater primarily to large enterprises, Tuya democratizes IoT adoption with cost-effective solutions accessible to small and medium-sized businesses, a massive untapped market.

Unlike Azure IoT and AWS IoT Core, Tuya offers an integrated ecosystem spanning IoT PaaS, SaaS and smart device distribution, enabling end-to-end device connectivity and streamlined deployment. Its modular approach allows businesses to customize their IoT infrastructure without technical expertise.

Tuya’s Industry SaaS solutions also differentiate it by addressing niche verticals like hospitality, energy management and security. This targeted strategy helps Tuya penetrate markets underserved by its larger rivals.

Conclusion: Buy TUYA Stock for Now

Despite its 32% YTD plunge, Tuya’s robust revenue growth, expanding SaaS ecosystem and strong financial position make it a compelling investment. The company’s strategic focus on geographic diversification, enterprise partnerships and technological innovation enhances its growth outlook.

From a valuation standpoint, TUYA currently trades at a price-to-sales multiple of 2.30X, which is well below the industry average of 2.94X. This discount provides an entry point for value-seeking investors who believe in the long-term potential of the cloud platform services.

TUYA currently carries a Zacks Rank #2 (Buy), implying that investors should accumulate the stock now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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