Analyst Has 4 Dividend Stocks to Buy With Big Q4 Potential

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Valero Energy Partners

This midstream master limited partnership (MLP) could have solid value at current trading levels. Valero Energy Partners L.P. (NYSE: VLP) owns, operates, develops and acquires crude oil and refined petroleum products pipelines, terminals and other transportation and logistics assets in the United States. Its assets include crude oil and refined petroleum products pipeline and terminal systems, including Port Arthur logistics system, McKee products system, Memphis logistics system, Three Rivers Crude System, Wynnewood Products System, Houston Terminal, St. Charles Terminal, and Corpus Christi Terminals located in the Gulf Coast and Mid-Continent regions of the United States.

This may be an outstanding choice for more conservative accounts as Valero Energy Partners has no direct exposure to commodity prices. The company derives 100% of its revenue via fee-based charges, which provides very stable cash flow.

In the second quarter the company produced distributable cash flow of $59 million, while it generated $51.5 million and $53 million in the prior two quarters. Plus, the company only distributes about half of that cash to investors. As a result, its distribution coverage ratio was 2.04 times last quarter and averaged 2.02 times this year and 2.06 in 2015. That is double the coverage of most MLPs.

Shareholders are paid a 3.44% distribution. The SunTrust price objective is $54, and the consensus target is $54.80. The shares closed most recently at $42.43.

Williams-Sonoma

This retailer has been hit hard over the past year and is offering investors an outstanding entry point. Williams-Sonoma Inc. (NYSE: WSM) is a specialty retailer of high-quality products for the home. These products, representing eight distinct merchandise strategies — Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, PBteen, Williams-Sonoma Home, Rejuvenation, and Mark and Graham — are marketed through e-commerce websites, direct mail catalogs and 618 stores.

The company also currently operates in the United States, Canada, Australia and the United Kingdom, offers international shipping to customers worldwide and has unaffiliated franchisees that operate stores in the Middle East and the Philippines, as well as stores and e-commerce websites in Mexico.

While some analysts worry about competition, the increase in new and previously owned home sales bodes well for the company going forward. CNBC’s Jim Cramer has been a big fan of the stock in the past.

Shareholders receive a solid 3.15% dividend. SunTrust has a $62 price target for the stock. The consensus target is set at $56.67. The shares closed most recently at $546.97.

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While these stocks are not suitable for all investors’ portfolios, they have outstanding upside potential and far less downside than high-flying momentum stocks. Plus, they could very well help investors catch up in their own portfolios.