In this article, we discuss top 12 dividend stock picks of Goldman Sachs. You can skip our detailed analysis of dividend stocks and their performance, and go directly to read Goldman Sachs Dividend Stocks: Top 5 Stock Picks.
Investors love dividend stocks because they are reliable and often a refuge during tough times when the economy and markets are wavering. More importantly, dividends have a strong history of keeping up with inflation. In the US, companies that provide dividends usually perform better during times of high inflation and increasing interest rates compared to non-dividend payers. Additionally, they’re often seen as safer choices, declining less than the overall market during downturns. This defensive quality is especially significant in the current unpredictable circumstances. Since 1926, dividends have represented nearly one-third of the stock market’s overall returns.
Dividend stocks experienced a slight drop this year as other asset classes began to catch the interest of investors. This doesn’t mean that dividend stocks have lost their appeal, as their demand remains steady regardless of the economic situation. In one of our previous articles on dividend investing we cited data from Fidelity Investments, which mentioned that dividends made over half of the market’s gains in high inflationary periods. The study also highlighted specific periods, like the 1940s, 1960s, and 1970s, where dividends accounted for 67%, 44%, and 73% of market gains, respectively. These decades saw inflation averaging above 5%, and overall returns were less than 10%.
Also read: Goldman Sachs Tech Stocks: Top 12 Stock Picks
Earlier this year, David Kostin, a Goldman Sachs chief US equity strategist, gave an optimistic view regarding dividend stocks. He expects a 5% increase in dividend payments from S&P 500 companies this year, with the potential for further growth. Here are some comments from the analyst:
“We expect that S&P 500 DPS [dividend-per-share] will reach $70 in 2023 and $73 (+4%) in 2024. Recent company actions also point to a healthy dividend growth environment. The difference in outlooks for dividend and buyback growth suggests firms focusing on dividends will continue to outperform buyback stocks.”
He further mentioned that investors often consider companies that have long dividend growth histories because such companies are often financially sound, with the ability to generate sustained profits. By continuously boosting dividends, these companies prioritize providing returns to their shareholders, appealing to those seeking stable income and potential capital appreciation.
In this article, we will discuss the top dividend stocks in Goldman Sachs’s portfolio. Some of them include NIKE, Inc. (NYSE:NKE), Bank of America Corporation (NYSE:BAC), and S&P Global Inc. (NYSE:SPGI).
Technology share chart
Our Methodology:
For this article, we used Goldman Sachs portfolio as of the second quarter of 2023 and picked dividend stocks with yields above 2%, as of August 16. Next, we ranked these stocks according to the firm’s stake value in each of these companies.
12. The Coca-Cola Company (NYSE:KO)
Goldman Sachs’ Stake Value: $1,292,654,368
Dividend Yield as of August 16: 3.03%
The Coca-Cola Company (NYSE:KO) is an American beverage company that also specializes in other non-alcoholic beverages. The company recently announced its Q2 2023 earnings and posted revenue of $12 billion, which showed a 6.2% growth from the same period last year. Year-to-date, its operating cash flow came in at $4.6 billion and its free cash flow for the period amounted to over $4 billion.
The Coca-Cola Company (NYSE:KO) has been growing its dividends consistently for the past 61 years. It currently pays a quarterly dividend of $0.46 per share and has a dividend yield of 3.03%, as of August 16. At the end of Q2 2023, Goldman Sachs owned a KO stake worth nearly $1.3 billion. Other dividend stocks in Goldman Sachs’ portfolios are NIKE, Inc. (NYSE:NKE), Bank of America Corporation (NYSE:BAC), and S&P Global Inc. (NYSE:SPGI).
At the end of Q2 2023, 61 hedge funds in Insider Monkey’s database reported having stakes in The Coca-Cola Company (NYSE:KO), which remained the same from the previous quarter. The collective value of these stakes is over $27.2 billion, with Berkshire Hathaway holding the largest stake in the company worth over $24 billion.
11. PepsiCo, Inc. (NASDAQ:PEP)
Goldman Sachs’ Stake Value: $1,302,298,455
Dividend Yield as of August 16: 2.78%
PepsiCo, Inc. (NASDAQ:PEP) is a multinational food and beverage company that operates in various sectors of the consumer goods industry. On July 20, the company declared a quarterly dividend of $1.265 per share, which was in line with its previous dividend. It is one of the best Goldman Sachs dividend stocks to consider as it has raised its payouts for 51 years in a row. The stock’s dividend yield on August 16 came in at 2.78%.
At the end of Q2 2023, Goldman Sachs owned $1.3 billion worth of stakes in PepsiCo, Inc. (NASDAQ:PEP). The company generated $22.3 billion in revenues in the second quarter of 2023, which grew by 10.3% from the same period last year. Its operating cash flow for the six months that ended in June 2023 came in at over $2 billion, compared with $1.8 billion in the prior-year period.
As of the close of Q2 2023, 68 hedge funds tracked by Insider Monkey reported having stakes in PepsiCo, Inc. (NASDAQ:PEP), down from 70 in the previous quarter. The overall value of these stakes is over $3.5 billion.
10. McDonald’s Corporation (NYSE:MCD)
Goldman Sachs’ Stake Value: $1,322,630,847
Dividend Yield as of August 16: 2.11%
McDonald’s Corporation (NYSE:MCD) is next on our list of Goldman Sachs’ dividend stocks to consider. At the end of Q2 2023, the bank owned an MCD stake worth over $1.3 billion, which represented 0.26% of its 13F portfolio.
McDonald’s Corporation (NYSE:MCD) currently pays a quarterly dividend of $1.52 per share and has a dividend yield of 2.11%, as recorded on August 16. In 2022, the company stretched its dividend growth streak to 46 years. In the second quarter of 2023, the company reported a 13.6% growth in its revenue on a year-over-year basis at $6.5 billion.
The number of hedge funds tracked by Insider Monkey owning stakes in McDonald’s Corporation (NYSE:MCD) grew to 68 in Q2 2023, from 64 in the previous quarter. The total value of these stakes is over $4.2 billion. With over 2.6 million shares, Citadel Investment Group was the company’s leading stakeholder in Q2.
9. American Tower Corporation (NYSE:AMT)
Goldman Sachs’ Stake Value: $1,334,334,309
Dividend Yield as of August 16: 3.41%
American Tower Corporation (NYSE:AMT) is an American real estate investment trust company that specializes in owning, leasing, and operating wireless and broadcast communication infrastructure. In the second quarter of 2023, the company posted revenue of $2.77 billion, up 3.7% growth from the same period last year. Its cash position also remained strong during the quarter, with an operating cash flow of over $1.2 billion and a free cash flow of $792 million.
American Tower Corporation (NYSE:AMT), one of the best Goldman Sachs dividend stocks to consider, has been raising its dividends for consecutive 11 years. The company pays a quarterly dividend of $1.57 per share and has a dividend yield of 3.41%, as of August 16.
American Tower Corporation (NYSE:AMT) was a part of 60 hedge fund portfolios at the end of Q2 2023, according to Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $3.03 billion.
Akre Capital Management mentioned American Tower Corporation (NYSE:AMT) in its Q2 2023 investor letter. Here is what the firm has to say:
“The Fund owns many businesses that stand to benefit enormously from A.I. The compute power demanded by A.I. is growing exponentially and will continue to fuel demand for the wireless and data center infrastructure provided by American Tower Corporation (NYSE:AMT). The two negative detractors from performance this quarter were American Tower and Danaher.”
8. Texas Instruments Incorporated (NASDAQ:TXN)
Goldman Sachs’ Stake Value: $1,435,467,316
Dividend Yield as of August 16: 2.95%
Texas Instruments Incorporated (NASDAQ:TXN) is an American semiconductor manufacturing company. It currently pays a quarterly dividend of $1.24 per share and has a dividend yield of 2.95%, as recorded on August 16. The company is one of the best Goldman Sachs dividend stocks to consider as it has raised its payouts for 11 years in a row.
Goldman Sachs owned a TXN stake worth over $1.4 billion at the end of Q2 2023, which made up 0.28% of the bank’s portfolio.
As of the close of Q2 2023, 56 hedge funds tracked by Insider Monkey reported having investments in Texas Instruments Incorporated (NASDAQ:TXN), up from 52 in the previous quarter. The consolidated value of these stakes is nearly $2.4 billion.
The London Company mentioned Texas Instruments Incorporated (NASDAQ:TXN) in its Q2 2023 investor letter. Here is what the firm has to say:
“Texas Instruments Incorporated (NASDAQ:TXN) – TXN shares declined 2% during the quarter. Demand was weaker in all markets except auto. While revenue was down 11% due to the slowing economy, we believe the outlook is positive. The company continues to invest in manufacturing facilities and should benefit from increased spending related to the CHIPS act. TXN is exposed to various end markets across the economy (e.g. automotive industrials). We believe growth in analog semiconductor content demand, in most markets, will drive TXN.”
7. Merck & Co., Inc. (NYSE:MRK)
Goldman Sachs’ Stake Value: $1,449,746,455
Dividend Yield as of August 16: 2.68%
Merck & Co., Inc. (NYSE:MRK) currently pays a quarterly dividend of $0.73 per share. The company has raised its payouts for 11 years running, which makes it one of the best Goldman Sachs dividend stocks to consider. The stock’s dividend yield on August 16 came in at 2.68%.
At the end of Q2 2023, Goldman Sachs owned over 12.5 million shares in Merck & Co., Inc. (NYSE:MRK), worth over $1.44 billion. The company represented 0.29% of the bank’s portfolio.
Merck & Co., Inc. (NYSE:MRK) saw growth in hedge fund positions in Q2 2023, as 78 funds tracked by Insider Monkey reported having stakes in the company, up from 75 a quarter earlier. The overall value of these stakes is over $2.65 billion. With roughly 3 million shares, AQR Capital Management was the company’s leading stakeholder in Q2.
6. The Home Depot, Inc. (NYSE:HD)
Goldman Sachs’ Stake Value: $1,531,470,617
Dividend Yield as of August 16: 2.49%
The Home Depot, Inc. (NYSE:HD) is a Georgia-based home improvement company that offers related products and services to its consumers. The company currently pays a quarterly dividend of $2.09 per share and the stock’s dividend yield on August 16 came in at 2.49%. The company holds a 13-year streak of consistent dividend growth.
In addition to HD, NIKE, Inc. (NYSE:NKE), Bank of America Corporation (NYSE:BAC), and S&P Global Inc. (NYSE:SPGI) are some other Goldman Sachs dividend stocks to consider.
At the end of June 2023, 68 hedge funds tracked by Insider Monkey presented a bullish stance on The Home Depot, Inc. (NYSE:HD), up from 65 a quarter earlier. The stakes owned by these hedge funds have a total value of over $2.23 billion.
Click to continue reading and see Goldman Sachs Dividend Stocks: Top 5 Stock Picks.
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Disclosure. None. Goldman Sachs Dividend Stocks: Top 12 Stock Picks is originally published on Insider Monkey.
