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Goldman Sachs Dividend Stocks: Top 12 Stock Picks

Vardah Gill
10 min read

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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.

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