Goldman Sachs predicts that companies paying dividends can expect growth, thanks to news of a significant payout from Meta Platforms. The investment bank has raised its dividend growth forecast for S&P 500 in 2024 from 4% to 6%, according to a note by David J. Kostin, the head of American equity strategy. Kostin highlighted better-than-expected earnings growth, peak bond yields, and easier year-over-year comparisons as reasons for an optimistic outlook on the future. It is worth noting that Goldman Sachs expects Meta’s dividend announcement to have a slight impact of less than 1% on the DPS (dividends per share) of S&P 500 in 2024, following the parent company Facebook’s announcement earlier this month that caught investors’ attention. Kostin wrote that this suggests investment opportunities in some dividend stocks.
By the end of 2022, the Goldman Sachs High Dividend and Growth Basket (GSTHDIVG), which consists of 50 equally-weighted stocks with high dividend yield and high projected dividend growth, outperformed the equal-weighted S&P 500 basket by 3 percentage points. It performed better than high dividend ratio and Dividend Aristocrats stocks, which had lower returns than the index by 7 and 6 percentage points, respectively. Additionally, GSTHDIVG is currently trading at an 18% discount to the index.
Here are a few companies included in Goldman Sachs’ dividend growth basket for October:
1. Truist Financial: The optimistic growth prospects for 2024 on a per-share basis are partially supported by 56 S&P 500 companies that have already announced dividend increases this year, averaging 6%. The financial sector has the highest percentage of growth. Truist Financial is one of these companies. In 2023, it had a dividend yield of over 7%. Other Wall Street firms have also shown interest in this company. In January, Bank of America upgraded Truist to a buy from neutral, citing three reasons, including a strong balance sheet ahead of expected interest rate cuts by the Federal Reserve this year. The company’s stocks have declined by nearly 2% in 2024.
2. Viatris: Another company in the portfolio is the pharmaceutical manufacturer Viatris. The healthcare sector’s shares in this company have increased by over 9% this year but have had negative returns from 2018 to 2022. Last year, it had a dividend yield of approximately 5%. In January, David Einhorn of Greenlight Capital revealed his position in Viatris after the buyers’ strike, pointing to stabilization in generic drug prices, which could lead to stock price growth.
3. Verizon Communications: Telecommunications company Verizon Communications’ stocks belong to the dividend growth basket. In 2023, it had a dividend yield of 8%. Morgan Stanley, which is overweight on this stock, said last week that it is more optimistic about Verizon after an informational session hosted by the telecom giant. Analyst Simon Flannery highlighted “emerging dynamics” in the company. Verizon’s stocks have increased by 6% in 2024.
Other stocks in Goldman Sachs’ dividend growth basket include Best Buy, Conagra Brands, and Devon Energy.
(Source: CNBC Michael Bloom’s work contributed to this report)
FAQ Section Based on the Key Topics and Information Provided in the Article:
Question 1: What forecast did Goldman Sachs raise for dividend growth per share for S&P 500 in 2024?
Answer: Goldman Sachs raised its forecast for dividend growth per share for S&P 500 in 2024 from 4% to 6%.
Question 2: What factors were mentioned as reasons for an optimistic outlook on the future?
Answer: The report highlighted better-than-expected earnings growth, peak bond yields, and easier year-over-year comparisons as reasons for an optimistic outlook on the future.
Question 3: How will Meta’s actions impact the DPS of S&P 500 in 2024, according to Goldman Sachs’ predictions?
Answer: Goldman Sachs expects that Meta’s dividend payout announcement will have a slight impact of less than 1% on the DPS of S&P 500 in 2024.
Question 4: What are the benefits of investing in dividend stocks?
Answer: Investing in dividend stocks can be beneficial due to the opportunity to receive regular dividend payments and the potential long-term growth of the stock value.
Definitions of Key Terms or Jargon Used in the Article:
– Dividend: The distribution of a portion of a company’s profits to shareholders as a form of return on investment.
– S&P 500: An index of the 500 largest publicly traded companies in the United States.
– DPS: Dividends per share; also referred to as dividend per share; the amount of dividends paid divided by the number of shares.
– Yield: The return rate or profit that an investor can earn from investing their capital in a particular investment.
Suggested Related Links:
– Goldman Sachs
– S&P Dow Jones Indices
– Meta (formerly Facebook)
– Truist Financial
– Viatris
– Verizon Communications
– Best Buy
– Conagra Brands
– Devon Energy
The source of the article is from the blog mendozaextremo.com.ar