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Which Top-Performing Dividend Stocks Look Most Attractive?

High-yield dividend stocks have been viewed more favorably than high-multiple growth stocks these days. After yet another month of excessive market-wide selling, the yields of many top dividend stocks are slightly richer.

As the Fed raises interest rates further, growth and value could continue to get slammed. This week, the Fed signaled that it's more than willing to keep the rate hikes coming until inflation backs down, even if it means jeopardizing a "soft landing" and inflicting more pain in markets.

Low-cost dividend stocks may or may not act as a safe haven as more rate hikes flow in. However, the sizeable payouts of various high-yielders could help investors better cope with the choppy waters. It's far better to get paid a cash dividend to sail these rough seas than to be left with nothing but a bad case of nausea for enduring this market rollercoaster ride.

In this piece, we'll use TipRanks' Comparison Tool to evaluate three top-performing dividend stocks to see which offers the most bang for investors' bucks.

Altria Group (MO)

Altria is a big tobacco company with a towering dividend yield of 6.7%. Year-to-date, shares are up over 12%, crushing the S&P 500, which remains in deep correction territory. Undoubtedly, Altria is a value play, but it's one that's on the wrong side of a secular trend.

Cigarettes are on their way out. Potential regulations could further accelerate the long-term secular contraction in tobacco products. Altria is in an unenviable place to be over the long run.

For now, though, the dividend is more than secure, and the vaping business should help offset some of the longer-term weaknesses and fuel modest dividend growth.

For the latest quarter, Altria delivered an in-line result. Revenue came in at $4.8 billion, with per-share earnings of $1.12, barely beating the $1.09 consensus estimate. There weren't many surprises in the quarter. In a market that's jittery over macro uncertainty, a lack of surprises should be viewed as a good thing.

With a 0.61 beta and a modest 4.6 times sales multiple, MO stock is an intriguing place to hide amid recent market volatility. Still, the health of Altria's margins is poised to decay with time, making shares a questionable long-term investment for those seeking to generate alpha.

Turning to Wall Street, analysts are mildly bullish, with the average Altria price target of $55.67 implying 9% upside from current levels. (See Altria stock forecast on TipRanks)

Shaw Communications (SJR)

Shaw Communications is a Canadian telecom that top rival Rogers Communications is looking to acquire for C$26 billion. Shares of Shaw spiked when the deal was announced nearly one year ago. Since then, shares of Shaw have gradually sunk lower as investors questioned whether the deal would end up going through.

Undoubtedly, Canada's telecom scene isn't as competitive as in the states. Canadians pay some of the highest wireless bills on the planet, and a big telecom deal was bound to draw the attention of federal regulators.

Today, the Shaw-Rogers merger is up in the air. Canada's competition bureau could step in and block the deal from going through. With Shaw's TSX-traded class B shares currently trading at C$35 and change per share, there's a nice gain to be had if the deal goes through. Upon approval, class B shares could be worth C$40.50, or about a 15% gain from current levels.

Indeed, merger arbitrage opportunities come with their fair share of risk. Though the potential gain from a deal approval isn't all too high, I think a deal rejection wouldn't be all that bad for shareholders. Further, a divestment of Shaw's mobile business Freedom Mobile could improve the odds of a regulatory green light.

If the merger ultimately gets blocked, class B shares could fall back towards the $25-30 range. For those seeking a nice dividend (currently yielding around 3.4%) and relative shelter from volatility, SJR seems to have a decent risk/reward at these levels.

Looking at the consensus breakdown, 1 Buy and 2 Holds have been published in the last three months. As a result, SJR gets a Moderate Buy consensus rating. Given the $31.60 average price target, shares could rise ~12% in the next year. (See SJR stock forecast on TipRanks)

Tourmaline Oil (TRMLF)

Tourmaline Oil is one of the hottest energy stocks in Canada, with an incredible 73% worth of gains year-to-date. Shares are now up a whopping 149% over the past year alone. Thanks to the parabolic move higher, the dividend yield has compressed to a mere 1.1%.

Though the momentum has been impressive, the stock still seems cheap at just 11.1 times trailing earnings. Undoubtedly, the recent surge in oil prices is the primary reason the Albertan energy play has seemingly gotten cheaper amid its stock price surge.

The longer commodity prices stay elevated, the more promising Tourmaline's cash-generation prospects will be. To put it simply, the firm is swimming in free cash flow. The company recently declared yet another special dividend of $1.50 per share. More such special dividends could be in the cards over the coming year, as the firm finds itself generating more cash than it knows what to do with.

Unless commodities fall off a cliff, it's hard to imagine a scenario that sees TOU stock giving up the magnificent gains it's posted over the past year.

Turning to Wall Street, analysts are bullish, with the average Tourmaline price target of $64.01 implying 13% upside from today's levels. (See TRMLF stock forecast on TipRanks)

Conclusion

There aren't many places to hide from volatility these days. The three dividend stocks are just a few of the plays that have been less influenced by the broader markets. Of the three plays, Wall Street analysts appear most bullish on Tourmaline Oil.

To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

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