Stocks had their worst first half in more than five decades, and even the top sectors are weakening. Dividend stocks should perform well regardless of the economic environment. Here are 50 stocks that Goldman Sachs noted have high dividend yields and growth. The S&P 500 got off to its worst start to the year since 1970 as inflation surged, financial conditions tightened, economic growth slowed, and geopolitical conflicts flared.
Every stock market sector except for energy suffered losses in the first half of 2022, and even that once-hot group has now crashed by 25% thanks to growing fears of a recession damaging demand. That further complicates the increasingly tough-to-navigate investing landscape.
It may appear as if there’s nowhere for investors to hide, but there’s one time-tested strategy that should hold up well regardless of what happens in the economy, wrote David Kostin, the chief US equity strategist at Goldman Sachs, in an early July note: dividend investing.
“Dividends represent an attractive opportunity, even if a recession materializes in 2023,” Kostin wrote.
Stocks that pay consistent dividends that are higher than the S&P 500’s yield of about 2% are enticing, in Kostin’s view, given that inflation is running hot, stock market volatility is elevated, and income is scarce as bonds suffer through their worst year in decades.
And though Kostin noted that futures are currently implying declines of 3% and 4% for 2023 and 2024, respectively, the strategy chief noted that dividends for S&P 500 companies have only fallen by about 1% in normal recessions since 1945. That suggests investors are too pessimistic about future dividends, especially when considering that a recession is still not guaranteed.
Buy these 50 stocks with high dividendsStocks that have high dividend yields that are growing quickly are very desirable, in Goldman’s view, and the firm listed 50 such stocks in its note. The median name on the list has not only a higher dividend yield (3.8% vs. 2.1%) and faster dividend growth (11% vs. 6%) than the typical S&P 500 stock, but it also trades at a lower price-to-earnings (P/E) ratio (11x vs. 17x).
Below are the 50 stocks with strong dividends that Goldman Sachs highlighted, along with the ticker, market capitalization, sector, and 2022E and 2023E dividend yields for each.