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Social Security’s funds are projected to run out in the next decade, at which point 80% of benefits will be payable.
Acting now may prevent more dramatic changes later, a new report finds.

Richard Stephen | Istock | Getty Images

The clock is ticking for Congress to shore up Social Security benefits.
The latest projections from Social Security’s actuaries show the program’s trust funds are due to run out in 2034, at which point 80% of benefits will be payable.

If Congress does not act by 2034, the program may be faced with an automatic 20% benefit cut for current beneficiaries, the need to increase Social Security taxes by 25% or a combination of benefit cuts and tax increases, according to a new report from the American Academy of Actuaries.
The program has been here before.
In 1983, Social Security’s trust funds were also close to depletion when a host of changes were passed by Congress.
But there were some advantages then that may not be available now. For example, there was more time for benefit changes, such as an increase to the retirement age, to be gradually phased in.
More from Personal Finance:Will Social Security be there for me when I retire?Medicare open enrollment may cut retirees’ health-care costsHow much your Social Security check may be in 2024

Moreover, the cash shortfall was just 1% of taxable payroll. Today, it is three times as large, or 3.12% of taxable earnings, according to the American Academy of Actuaries.
Addressing the problem sooner rather than later can help in several key ways, according to the member professional organization.
Early action would make it less likely a 25% payroll tax increase would be needed in 2034.
Moreover, benefit cuts may also be smaller.
Making adjustments now would also give current and future beneficiaries a better idea of what to expect.
“The sooner you can have Congress come together and come up with some options to address these challenges, the better it is for the American people,” said Linda K. Stone, senior pension fellow at the American Academy of Actuaries.

“There’ll be more time for individuals to understand what’s happening and adjust their own financial plan,” she said.
While polls show the program’s shortfall has prompted worries that Social Security benefits will dry up, the agency recently moved to quash those fears.
“It’s a long way from not having any money to pay for any benefits,” Security Administration Chief Actuary Stephen Goss said of the program’s funding in a recent agency interview.
“So, people should not worry about the trust fund running out of money, as is sometimes said, and having an inability to pay any benefits,” he said.
Lawmakers may be able to select from the following menu of changes to shore up the 2034 shortfall, according to the American Academy of Actuaries’ report.

Tax increases

1. Eliminate the taxable maximum so all earnings are taxed. Currently, earnings up to $160,200 are taxed for Social Security. Eliminating that cap could make it so high earners pay more into the program. Because this change would cover just 78% of the 2034 shortfall, other changes would be needed according to the American Academy of Actuaries.
2. Tax all earnings above $400,000 or make 90% of all earnings subject to the payroll tax. These two changes may cover 55% and 36% of the shortfall, respectively, according to the report.
3. Increase the payroll tax rate by 25%. By raising the Social Security payroll tax rate to 7.75% from 6.2% for both workers and employees, that may result in enough to pay 100% of benefits in 2034. However, that may not be enough to cover all benefits in subsequent years. Moreover, the higher tax rate may be burdensome for low-income workers.
4. Tax investment income, estates, gifts and earnings such as carried interest. These areas have never been taxed for Social Security, which may prompt resistance, the report notes. While the changes may be implemented gradually, they would need to start sooner to eliminate the 2034 shortfall, the report notes.

Benefit cuts

1. Reduce benefits for high-income individuals who have not yet claimed. Lawmakers may approach this in multiple ways. People at the high end of the benefit formula may have their replacement rate reduced to 5% from 15% over five years. People above a median income could have their replacement rate reduced to 10% from 32%. Additionally, they may opt to limit the growth of the initial benefit for people at the taxable maximum, or $160,200. Or, a means test could eliminate benefits for people with high incomes or assets. These proposals would have varying impacts on the 2034 shortfall.
2. Gradually raise the full retirement age. The full retirement age is the point at which beneficiaries are eligible for 100% of the benefits they’ve earned. That age is moving up to 67, based on changes enacted in 1983. To reflect longer life spans and careers, lawmakers may consider pushing that age higher. That may include raising the age by about one month every two years or by two months per year for 12 years. Those changes may affect 3% to 10% of the 2034 shortfall, respectively, if implemented soon. Importantly, those policies may be paired with offsets to protect those with low incomes who may have shorter life spans and may not be able to work as long.
3. Reduce the annual cost-of-living adjustment. The measurement for Social Security’s annual cost-of-living adjustment may be changed to the chained consumer price index, which would reduce benefit increases by about 0.3 percentage points each year. That change would cover 13% of the 2034 shortfall, according to the American Academy of Actuaries. In comparison, another proposal to change the COLA measure to the consumer price index for the elderly, or CPI-E, would increase the annual benefit adjustments by 0.2 percentage points on average. Meanwhile, costs would increase by about 8% of the 2034 shortfall with that change, the report found.
Other changes may also be implemented, yet may not impact the 2034 shortfall, the report found.
Moreover, addressing the shortfall for that 2034 date may not fix the program forever, the report notes.
Earlier this year, the American Academy of Actuaries launched a tool to let consumers decide which combination of changes they would choose to shore up Social Security’s finances. More

Parents who took out federal loans on behalf of their children are ineligible for the Biden administration’s new student loan relief measures, including the Saving on a Valuable Education repayment plan.
Thanks to a “super-secret double consolidation method,” there is a way for parent PLUS borrowers to access SAVE.
However, borrowers who want to pursue this option must act quickly. The U.S. Department of Education is expected to close this loophole by July 2025.

Once families hit their federal student loan limits, they often turn to federal Parent PLUS loans to secure the financing they need to send their children off to college.
As college costs rose, so have student loan balances, plus the share of debt owed not just by graduates, but their parents, as well.

Parent PLUS loans account for $111 billion

The share of parents taking out Parent PLUS loans to help cover the costs of their children’s college education has increased steadily over time, research shows, almost quadrupling over the past two decades, according to Kantrowitz.
Currently, 3.7 million parents have $111.3 billion in Parent PLUS loans outstanding. The average parent PLUS loan is roughly $30,000.
Parent PLUS loans also come with an interest rate of more than 8%, compared with 5.5% for undergraduate student loans.

There could be help for parents after all

The only option for parent borrowers outside of the standard, graduated and extended repayment plans is a “special limited window of opportunity” to consolidate Parent PLUS loans into direct consolidation loans, making them eligible for income-driven repayment plans, Chany said. However, this process “is complicated.”
The Institute of Student Loan Advisors provides step-by-step guidance on this loophole — referred to as the “super-secret double consolidation method” — which enables parents to gain access to lower-cost income-driven plans. 

“The gist is that if you consolidate a consolidation loan, and are careful about how you go about doing it, that new loan will be eligible,” Kantrowitz explained. This also entails switching to a different loan servicer and submitting a paper form, among other steps, so the new loan is no longer tied to the original Parent PLUS.
Still, the extra legwork is worthwhile. By switching from income-contingent repayment to SAVE, for example, payments on undergraduate loans could be reduced from 20% of discretionary income to 5%. “It cuts the payment potentially by a factor of four,” Kantrowitz said. “It is a dramatic difference in the monthly loan payments.”
The savings over 20 years could amount to “thousands or even tens of thousands of dollars,” he estimated.
But “there is limited time left to take advantage of it,” Kantrowitz also added. The U.S. Department of Education said it will close this loophole after July 1, 2025.
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Rollovers from 401(k) plans to IRAs will be most affected by a recent U.S. Department of Labor proposal to raise protections for retirement advice, legal experts said.
In 2020, about 5.7 million Americans rolled a total $618 billion into IRAs, according to IRS data.
The Labor Department is concerned financial conflicts cause brokers to give investment advice that’s not in customers’ best interests. Critics say the current regime provides adequate protection.

Bloomberg | Bloomberg | Getty Images

Why Labor Department wants to raise protections

In 2020, about 5.7 million Americans rolled a total $618 billion into IRAs, according to most recent IRS data. That’s more than double the $300 billion rolled over a decade earlier.
IRAs held about $11.5 trillion in 2022, almost double the $6.6 trillion in 401(k) plans, according to the Investment Company Institute. The bulk of those IRA assets come from rollovers.

More than 4 in 10 American households — about 55 million of them — owned IRAs in 2022, ICI said.
Here’s the problem, in the eyes of the Labor Department: 401(k) investors have certain protections that don’t generally extend to IRA investments or the advice to move money to IRAs.
All companies that sponsor a 401(k) plan owe a “fiduciary” duty to their workers, as codified by the Employee Retirement Income Security Act of 1974.

That means they have a legal responsibility to act in workers’ best interests when it comes to things like picking the investment funds for their company 401(k) and ensuring costs are reasonable.
“ERISA fiduciary duties are the highest fiduciary duties under U.S. law,” said Josh Lichtenstein, partner at law firm Ropes & Gray.
Current law exempts most rollover advice from these protections, legal experts said. For example, there’s a waiver for brokers who make a one-time recommendation to a 401(k) investor to roll money to an IRA and don’t maintain a regular relationship thereafter.
Investors also often pay higher fees in IRAs relative to 401(k) plans, according to a recent study by The Pew Charitable Trusts. People who rolled money to an IRA in 2018 will lose $45.5 billion in aggregate savings due to fees and lost earnings over 25 years, Pew found.

Why the new rule would be a ‘sea change’

Julie A. Su, nominee for deputy secretary of Labor, testifies during her Senate Health, Education, Labor and Pensions Committee confirmation hearing in Washington, D.C., on March 16, 2021.
Tom Williams | CQ-Roll Call, Inc. | Getty Images

The Labor Department rule, if enacted, would crack down on financial conflicts of interest that may exist when brokers, insurance agents and others recommend that consumers roll their money to an IRA.
That advice typically generates compensation like a commission for the broker or agent, and the Labor Department is concerned those incentives may bias recommendations for certain investments that pay them more but aren’t in an investor’s best interests.
For example, the White House Council of Economic Advisers estimates that consumers lose up to $5 billion a year just due to conflicted advice to roll money to indexed annuities, a type of insurance product.
The Department’s proposed rule would expand ERISA’s fiduciary protections to cover most rollover solicitations, experts said.
It’s “a sea change,” said David Levine, principal at Groom Law Group.
“They’re trying to fill what they see as gaps” in the rules, he added.
He expects a final rule to be issued in the spring and take effect in early summer 2024.

Many rollover transactions are already overseen by other regulatory bodies like the Securities and Exchange Commission and National Association of Insurance Commissioners, experts said.
But the Labor Department standard being proposed is more stringent than those existing regimes, Lichtenstein said.
Critics of the Labor Department rule think the existing measures provide adequate protections for retirement savers, while proponents of the rule argue otherwise.
The Obama administration also tried to raise protections for retirement savers, including those for rollovers, but its rule was killed in court in 2018.
Before that court ruling, the Obama-era regulation resulted in fewer choices for retirement savers, such as fewer commissioned brokers opting to give retirement advice, Lichtenstein said. He would expect a similar dynamic with the current initiative.
“I think it’s hard to argue there’s no increase in investor protection,” Andrew Oringer, partner at The Wagner Law Group, said of the proposal. “As to whether the Department has gone too far or not far enough, I don’t know.” More

Treasury Secretary Janet Yellen on Tuesday announced IRS goals for the 2024 tax filing season.
Yellen expanded upon previous goals, highlighting IRS plans for improved service, technology and a limited free Direct File pilot for the upcoming tax season.
The speech comes less than one week after the Republican-led House passed a bill to provide billions in aid to Israel paired with equal cuts to IRS funding.

U.S. Treasury Secretary Janet Yellen outlines the improvements the IRS will deliver to taxpayers in 2024, during remarks at IRS Headquarters in Washington on Nov. 7, 2023.
Kevin Lamarque | Reuters

1. Expanded taxpayer service

Yellen said the agency made a “tremendous leap forward” during the 2023 tax filing season by significantly reducing phone wait times.
“This filing season, we will build on this foundation and continue expanding services for taxpayers: by phone, online and in person,” she said.

Renewing the agency’s pledge to achieve an 85% level of service, the IRS will aim for average call wait times of five minutes or less.
Yellen also highlighted plans to improve the agency’s online Where’s My Refund? tool, along with more hours of in-person help through Taxpayer Assistance Centers and volunteer tax prep.

2. Boosted technology

The IRS also met its paperless processing initiative goal, which allows taxpayers to electronically upload and respond to all notices.
Paper backlogs have been an issue for the IRS, and the agency estimates more than 94% of individual taxpayers will no longer need to send mail.
“The IRS will reduce errors and storage costs,” Yellen said. “And we’ll speed up processing times for the system as a whole.”
By the start of the filing season, taxpayers will be able to digitally file 20 more forms, including certain business forms, she said.

3. Limited free Direct File pilot

The IRS will also prioritize a limited Direct File pilot, available to certain taxpayers in 13 states to file federal returns for free, Yellen said.
“The pilot is an opportunity to learn,” she said. “We’ll test the taxpayer experience, technology, customer support, state integration and fraud prevention and then apply these insights as we consider scaling to more users.”
The agency is still finalizing the scope of the invitation-only pilot program, but it expects the service will include low- to moderate-income individuals, couples and families who claim the standard deduction.

Yellen’s speech comes less than one week after the Republican-led House passed a bill to provide $14.3 billion in aid to Israel paired with equal cuts to IRS funding championed by newly elected Speaker Mike Johnson, R-La.
It’s the second time House Republicans voted to strip IRS funding in 2023, largely seen as political messaging without support from the Democrat-controlled Senate. The new bill would add $26.8 billion to the U.S. budget deficit, according to a Congressional Budget Office report.
“Playing politics with IRS funding is unacceptable,” Yellen said. “Cutting it would be damaging and irresponsible.”Don’t miss these stories from CNBC PRO: More

Standard monthly Part B premiums will go up by $9.80 per month next year, to $174.70 per month.
If you have a higher income, you may pay a higher monthly premium.
Here’s what to know about managing those premiums, which affect the size of your monthly Social Security check.

Peopleimages | Istock | Getty Images

When to appeal your Medicare Part B premium

You generally can’t have your Medicare Part B premiums adjusted — with one exception, according to Tim Steffen, director of advanced planning at financial services company Baird.
“If something has materially changed in your situation … you can appeal your Medicare premium,” Steffen said.
That applies to events that have caused your income to go down since 2022, such as a divorce, the death of a spouse, the loss of a pension or starting retirement.
You may file an appeal once you receive your benefit notice for 2024.

Medicare Part B premiums are based on beneficiaries’ modified adjusted gross income from two years prior. Therefore, 2024 Part B premiums are based on your 2022 federal tax returns.
That includes adjusted gross income — wages, retirement distributions, investment income, capital gains, rental income and Social Security benefits — as well as tax-exempt interest.
If you have municipal bond interest that you don’t pay federal taxes on because it is exempt, that can still prompt higher Medicare Part B premiums, Steffen said.

$1 in extra income can mean a higher premium

Managing Part B premium costs can be tricky, because even just $1 in additional income could push you into a higher bracket if you are close to the thresholds, Steffen noted.
Certain tax management strategies, such as Roth individual retirement account conversions, will trigger higher taxable income for the year the transaction was completed. Consequently, that may also result in a higher Medicare Part B premium.
“You can’t really lower your premium, you can just avoid increasing it,” Steffen said.
It helps to stay mindful of the income break points, he said. However, be sure to keep in mind that brackets for future years will change. More

San Francisco 49ers defensive lineman Arik Armstead recently shared one of his pay stubs on TikTok for “motivational and educational purposes.”
The pay stub revealed a breakdown of his gross earnings, tax withholdings, payroll deductions and net take-home pay.
While the pay stub showed gross earnings of more than $4 million year to date, experts say there are lessons for everyday taxpayers.

Arik Armstead of the San Francisco 49ers at the NFC Championship game against the Philadelphia Eagles on Jan. 29, 2023.
Kevin Sabitus | Getty Images Sport | Getty Images

1. Know where your dollars are going

In the era of direct deposit and electronic records, it’s easy to let months pass without reviewing your pay stubs. But experts say it’s important to know where each dollar goes.
Like other W-2 employees’ pay stubs, Armstead’s includes a breakdown of gross and net earnings for one pay period — nearly $400,000 compared to roughly $200,000 — along with a summary of earnings to date.

You can also see an itemized list of taxes, including Medicare, Social Security, federal, state and local tax withholdings, and other payroll deductions, which bring Armstead’s net take-home pay down significantly.
“This is what everyone else’s paycheck looks like with much bigger numbers,” said Albert Campo, a certified public accountant and president of AJC Accounting Services in Manalapan, New Jersey.

2. Monitor your withholdings

With those gross earnings of more than $4 million to date, Armstead quickly hit the top income tax brackets for both federal and California state taxes, said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.  
For 2023, the top federal income tax rate is 37% and the highest rate in California is 12.3%, with an additional surcharge of 1% for income of more than $1 million. “The more you make, the more you pay,” Lucas added.
Of course, working primarily in California, Armstead owes considerably more than an athlete living in income-tax-free states like Florida or Texas.

Like other W-2 workers, Armstead’s withholdings were his decision, elected via Form W-4, according to CFP and enrolled agent John Loyd, owner at The Wealth Planner in Fort Worth, Texas.
While it’s possible to withhold less than you’ll owe, you could risk underpayment penalties on top of a sizable income tax bill in April. “It’s super important for everyone to pay attention” when filling out Form W-4 and throughout the year, he said.
You can use the IRS withholding estimator to make sure you’re on track with withholdings and make adjustments through your HR department as necessary.

3. Max out your 401(k) to save on taxes

In addition to significant tax withholdings, Armstead also maxed out his workplace retirement plan for 2023.
There are limited ways to reduce your taxes as a W-2 worker. But you can reduce your adjusted gross income with pre-tax 401(k) contributions, experts say.

If you’re under age 50, you can defer up to $22,500 in 2023 and $23,000 in 2024. Savers age 50 and older can funnel an extra $7,500 into their accounts.
In 2022, only 15% of Americans maxed out 401(k) contributions, according to Vanguard, and Armstead is among those savers for 2023, his pay stub shows. More

More employers are including a range of non-cash benefits, perks and flexibility options, according to a recent ZipRecruiter survey.
While those seeking jobs may find more transparency up front, the negotiations process when hiring is getting more challenging.
Pay transparency has not significantly altered average wage ranges listed in job postings, even though those ranges have somewhat widened.

Commuters arrive from Metro North Railroad trains in Grand Central Station in New York.
Timothy A. Clary | AFP | Getty Images

Rising pay transparency is causing a new kind of competition among employers — and it’s not necessarily for talent.
Instead, the shift in employers opting to share salaries on job listings has sparked an “arms race” for better starting pay and other benefits, Julia Pollak, chief economist at ZipRecruiter, told CNBC. And more employers are also including a range of non-cash benefits, perks and flexibility options in their job postings, according to a recent ZipRecruiter survey on pay transparency.

The survey found that 72% of employers post pay information on all job listings, taking the percentage of postings with salaries listed into the range of 50% to 60% on ZipRecruiter.
Other job sites are observing similar trends.
More from Personal Finance:The ‘radically different’ wage growth forecast in 2024Cooling job market no reason for panic yet, economists sayRetirement is overrated, Gen Z says, as ‘soft saving’ trend takes hold
For example, at Indeed, state laws requiring pay transparency have helped push employers to list salary ranges, especially in sectors like software development and technology, Indeed economist Cory Stahle said.
“We’ve seen a pretty dramatic uptick in the number of employers who are actually even including wages on our job postings,” Stahle said.

The number of employers that include wages in their job postings has increased significantly this year, in part due to the impact of laws in states such as California, Colorado and Washington. In addition, the tight labor market and pay transparency are acting as dual forces — with employers posting wages and benefits up front as a way to attract workers who have been difficult to draw in.

While those seeking jobs may find more initial transparency about compensation, the negotiations process when hiring is getting more challenging, said Aaron Terrazas, Glassdoor’s chief economist.
“Recruiters can feel less flexibility and … less ability to negotiate with candidates and raise pay,” Terrazas said.
As a result, pay transparency has not significantly altered average wage ranges listed in job postings, even though those ranges have somewhat widened.
“When we talk about a little bit of widening, it’s not necessarily that these jobs are now all of a sudden having $500,000 ranges,” Stahle said. “We’re talking about a few percentage points.”

Pay listings avoid ‘wasting recruiters’ time’

Beyond any material impact on wage levels, rising pay transparency has had the largest effect on how employees and employers behave during the job-seeking and hiring processes.
Employers are using pay transparency to attract candidates who are actually willing to receive the pay that is listed — and discourage others from applying “instead of wasting recruiters’ time,” Pollak said.
“I think many of them are kind of patient and prepared to hold out for those candidates prepared to sort of suck it up and accept what they’re giving,” she added.
The challenge that pay transparency presents to employers is that jobs with pay information tend to draw more applicants, as knowing the salary helps applicants determine if a job could support their current cost of living. To address these issues and allow for negotiation, some employers have narrowed the maximum wage limit.

As it becomes normal to know the salary for a job when applying, employees stand to benefit from becoming more aware of other perks, too.
For private industry workers, benefits account for 29.4% of compensation, compared to 31.4% for civilian workers overall, according to the U.S. Bureau of Labor Statistics.
“Pay transparency in some ways moves the competition away from salaries, away from wages and toward non cash benefits, or toward equity comp, toward flexibility,” Terrazas said.

In fact, knowing how much a job pays beforehand could actually take a factor out of jobseekers’ reasoning, as they consider other things that “are really important” but masked by salary, said LaCinda Glover, a senior principal consultant at Mercer. These include job culture, benefit programs, managerial issues and career development.
In the year to come, pay transparency “will start putting pressure on organizations to look at other factors as pay becomes a little bit more of a known fact,” Glover said. More

A Citibank sign in front of one of the company’s offices in California.
Justin Sullivan | Getty Images

The ongoing market volatility continues to add to investors’ woes, making it difficult for them to pick the right stocks.
However, it is always better to have a longer-term investment horizon and look for names that can enhance total returns with safe dividends and capital appreciation.

To that end, here are five attractive dividend stocks, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.

Ares Capital

This week we will first look at a high-dividend yield stock Ares Capital (ARCC). Ares is a business development company that offers a range of financing solutions to the middle market. The company recently reported a beat on third-quarter earnings, driven by higher interest rates and continued stable credit quality.
The company also declared a dividend of 48 cents per share for the fourth quarter, payable on Dec. 28. ARCC offers a dividend yield of 9.8%.  
Commenting on the Q3 results, RBC Capital analyst Kenneth Lee noted that credit performance is still good, with loans on non-accrual status declining slightly quarter-over-quarter to a very low 1.2% of the portfolio (on an amortized cost basis). That said, he thinks that non-accruals could rise sometime next year.
The analyst highlighted other positives for Ares Capital, including portfolio diversification. The analyst also thinks that the company’s dividends are strongly backed by its core earnings per share generation and potential net realized gains.

Lee reiterated a buy rating on ARCC stock with a price target of $21 saying, “We still favor ARCC’s strong track record of managing risks through the cycle, well-supported dividends, and scale advantages.”
Lee ranks No. 251 among more than 8,500 analysts tracked by TipRanks. His ratings have been profitable 57% of the time, with each delivering an average return of 12.6%. (See ARCC Stock Charts on TipRanks)  

Citigroup

Next on this week’s list is banking giant Citigroup (C). In October, the bank delivered better-than-anticipated results for the third quarter, fueled by strength in its institutional clients and personal banking units. Citi recently announced a massive reorganization that would simplify its operating model and enhance its business.
The bank announced a quarterly dividend of 53 cents per share, payable on Nov. 22. Citi’s dividend yield stands at 5%.
BMO Capital analyst James Fotheringham noted that Citi’s Q3 results were driven by higher-than-projected revenue (with net interest income coming in 5% above consensus), lower operating expenses, and reduced credit costs.
The analyst raised his core earnings per share estimates for 2023, 2024, and 2025 by 11%, 6%, and 3%, respectively, to reflect lower than previously-modeled credit costs and a slower-than-expected decline in net interest margin.
Fotheringham also increased his price target for the stock to $66 from $61 and reiterated a buy rating, saying, “C is our top pick among large-cap banks; shares trade at the largest discount (by far) to TCE [total capital employed] among the money-center banks.”   
Fotheringham holds the 372nd position among more than 8,500 analysts on TipRanks. Moreover, 56% of his ratings have been profitable, with each generating an average return of 9.4%. (See Citigroup Blogger Opinions & Sentiment on TipRanks)

McDonald’s

Dividend aristocrat McDonald’s (MCD) recently reported its third-quarter results. The fast-food chain exceeded Wall Street’s expectations, thanks to higher prices that helped offset weakness in the traffic at U.S. restaurants.
In early October, MCD announced a 10% hike in its quarterly dividend to $1.67 per share, which will be payable on Dec. 15. The company has increased its dividends for 47 consecutive years. The company pays a dividend yield of 2.5%.
BTIG analyst Peter Saleh, who ranks No. 667 among more than 8,500 analysts on TipRanks, highlighted that the sales and earnings upside in MCD’s Q3 results was coupled with rather cautious comments about the U.S. traffic. Traffic had declined slightly due to reduced frequency from lower-income customers and pressure in the “breakfast daypart.”
Nonetheless, the analyst noted that MCD still experienced wide geographic strength and remains better positioned than its rivals. Looking ahead, Saleh expects the company to accelerate its U.S. expansion next year, with his checks indicating that MCD has about 250 units in the pipeline. He also expects the company to have a greater focus on value and digital engagement, as well as an expansion of its automated order-taking technology in 2024.
“We view McDonald’s as one of the strongest restaurant concepts in the world that is in the middle stages of a multi-year sales recovery,” said Saleh.
Saleh reiterated a buy rating on McDonald’s stock with a price target of $300. His ratings have been successful 52% of the time, with each rating delivering an average return of 7.9%. (See McDonald’s Financial Statements on TipRanks)

AT&T

We now move to telecommunications giant AT&T (T), which impressed investors by reporting robust subscriber additions for the third quarter, thanks to promotions and phone upgrades. Furthermore, the company raised its full-year free cash flow guidance to about $16.5 billion from $16 billion. AT&T offers an attractive dividend yield of 7%.
On Oct. 26, Tigress Financial Partners analyst Ivan Feinseth reiterated a buy rating on AT&T stock with a price target of $28. The analyst highlighted that the rise in Q3 subscribers and cash flow mark a significant turn in AT&T’s business performance trends.
He added that while 2022 was a transitional year, the company’s revenue, cash flow and profitability will rise significantly in 2023 and beyond, with the long-term growth driven by ongoing 5G and broadband rollout in business communications.
“AT&T will increasingly leverage its 5G high-speed fiber network to drive ongoing subscriber growth and further enhance its Edge Computing capabilities,” said Feinseth.
The analyst noted that AT&T reduced its debt by over $3 billion in Q3 2023, which would reduce interest expense and drive higher investment in its connectivity business. He thinks that the company will further optimize its dividend payout ratio such that it can support ongoing investments while returning cash to shareholders.
Feinseth holds the 453rd position among more than 8,500 analysts on TipRanks. Moreover, 54% of his ratings have been successful, with each generating an average return of 8.2%. (See AT&T Hedge Fund Trading Activity on TipRanks)

Target

Feinseth is also bullish on another dividend stock: big-box retailer Target (TGT). The analyst thinks that near-term pressures create an attractive opportunity to buy the stock, as the company is well-positioned to drive revenue growth and profitability over the long term and further enhance shareholder value.
The analyst expects Target’s multiple strengths — including its loyal customer base, operating efficiencies and enhanced fulfillment capabilities — to help it navigate ongoing consumer headwinds, marketing errors and inventory shrink troubles.
Feinseth also highlighted that the retailer is enhancing its product offerings by adding several new products across its major product lines. It is also expanding its footprint by opening new stores while remodeling existing ones. (See Target Insider Trading Activity on TipRanks)    
He pointed out that TGT initiated its dividend in 1967 and has increased its dividend annually since 1971. In June 2023, the company raised its quarterly dividend by about 2% to $1.10 per share, following a massive 20% increase in June 2022 to $1.08 per share. TGT’s dividend yield stands at 3.9%.
Feinseth lowered TGT’s price target to $180 from $215 due to near-term challenges but maintained a buy rating, saying, “Increasing value focus in consumer spending trends, and moderation in inflationary pressures and input costs, will drive a reacceleration in Business Performance trends.” More