In a falling rate environment and the concerns based on the yield curve inversion, Goldman Sachs is advising clients to buy high-dividend payers, which it says are trading at their cheapest levels in nearly 40 years relative to stocks with low yields.
Goldman Sachs is in this case recommending to its clients the firm’s Dividend Growth basket, which is a sector-neutral way to own stocks with high dividend yields, strong dividend growth and manageable payout ratios. Based on those screening criteria the average stock in its basket has a dividend yield of 3.8% versus 1.92% for the typical S&P 500 stock.
Below the historical S&P 500 dividend yield.
Here are some stocks in the Goldman’s dividend growth basket, including yield and dividend growth rate.
| Company | Symbol | Dividend yield | Dividend Growth Rate 5y |
|---|---|---|---|
| AT&T | T | 5.83% | 2.13% |
| Kohl's | KSS | 5.89% | 11.75% |
| Archer-daniels Midland | ADM | 3.70% | 12.01% |
| Citizens financial | CFG | 4.44% | na |
| AbbVie | ABBV | 6.64% | na |
| Eaton | ETN | 3.67% | na |
| Seagate Technology | STX | 5.47% | 16.19% |
| Simon Property Group | SPG | 5.52% | 12.56% |
