As the calendar turns over to 2025, leading Wall Street firms such as Jefferies are releasing their top stock picks for the new year. Typically, these are companies that analysts have an incredible conviction for. In addition, they often have good upside to the assigned price target and are bestowed with either a Buy or Overweight rating, depending on the company providing the coverage.

With all of the major indices making parabolic moves higher in 2024, we were very interested to see what the top prognosticators across Wall Street think is in store for 2025 as we start the second quarter of the new century. Not surprisingly, many of the firms we cover are optimistic going forward, despite some trepidation after the big moves. The team at Jefferies made some changes to the firm’s well-respected Franchise Picks list, and three of their picks for 2025 look like outstanding ideas for growth and income investors.

Why do we cover dividend stocks?

Dividend stocks provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.

Caterpillar

This large-cap leader is one of the top infrastructure ideas across Wall Street and pays a solid 1.55% dividend. Caterpillar Inc. (NYSE: CAT) manufactures and sells construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide.

Caterpillar has five segments:

• Construction Industries
• Resource Industries
• Energy and Transportation
• Financial Products
• All other

Its Construction Industries segment offers:

• Asphalt pavers
• Compactors
• Road reclaimers
• Forestry machines
• Cold planers
• Material handlers
• Track-type tractors
• Excavators
• Telehandlers
• Motor graders, and pipelayers
• Compact track, wheel, track-type, backhoe, and skid steer loaders
• Related parts and tools

The company’s Resource Industries segment provides:

• Electric rope and hydraulic shovels
• Draglines
• Rotary drills
• Hard rock vehicles
• Tractors
• Mining trucks
• Wheel loaders
• Off-highway and articulated trucks
• Wheel tractor scrapers, and dozers
• Fleet management products
• Landfill and soil compactors
• Machinery components
• Autonomous-ready vehicles and solutions
• Work tools and safety services
• Mining performance solutions, as well as related parts and services

The Energy & Transportation segment offers reciprocating engine-powered generator sets, reciprocating engines, drivetrain, and integrated systems and solutions; turbines, centrifugal gas compressors, and related services; diesel-electric locomotives and components; and other rail-related products.

The company’s Financial Products segment provides operating and finance leases, installment sale contracts, revolving charge accounts, repair/rebuild financing services, working capital loans, wholesale financing, and insurance and risk management products and services.

Its All Other Operating segment offers filters and fluids, undercarriage, ground engaging tools, fluid transfer products, precision seals, rubber sealing and connecting components, parts distribution, logistics solutions, and distribution services, brand management and marketing strategy services, and digital investment services.

Flowserve

Off the radar, but this top stock pays a respectable 1.45% dividend and could be poised for a big 2025. Flowserve Corp. (NYSE: FLS) designs, manufactures, distributes, and services industrial flow management equipment in the United States, Canada, Mexico, Europe, the Middle East, Africa, and the Asia Pacific.

It operates through two segments:

• Flowserve Pump Division (FPD)
• Flow Control Division (FCD)

The FPD segment offers:

• Custom and pre-configured pumps and pump systems
• Mechanical seals
• Auxiliary systems, replacement parts, upgrades, and related aftermarket services
• Equipment services include installation and commissioning services, seal systems spare parts, repairs, advanced diagnostics, re-rate and upgrade solutions, retrofit programs, and machining and asset management solutions.

The company also manufactures a gas-lubricated mechanical seal for use in high-speed compressors for gas pipelines and in the oil and gas production and process markets.

The FCD segment provides:

• Engineered and industrial valve and automation systems, including isolation and control valves, actuation, controls, and related equipment
• Equipment maintenance services for flow control systems, including advanced diagnostics, repair, installation, commissioning, retrofit programs, and field machining capabilities

This segment’s products control, direct, and manage the flow of liquids, gases, and multi-phase fluids.

Flowserve Corp. primarily serves oil and gas, chemical and pharmaceuticals, power generation, water management markets, and general industries.

Ventas

Paying a solid 3.06 dividend in a sector that benefits from an aging population is a great idea for 2025. Ventas Inc. (NYSE: VTR) has approximately 1,350 properties in North America and the United Kingdom, and It occupies an essential role in the longevity economy.

The company’s growth is fueled by its over 800 senior housing communities, which provide valuable services to residents and enable them to thrive in supported environments.

The Ventas portfolio includes:

• Outpatient medical buildings
• Research centers
• Healthcare facilities

The company aims to deliver outsized performance by leveraging its unmatched operational expertise, data-driven insights from its Ventas OI platform, extensive relationships, and strong financial position.

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