Even though stocks look shaky right now, we are still in a strong GDP growth environment. Here’s how to play that trend according to strategists at one of the world’s biggest investment firms.
“During strong GDP growth environments, companies returning the most cash to shareholders typically outperform firms investing for future growth,” says Goldman Sachs. This is because the Fed will raise rates to keep the economy in line. The solution, according to the firm, is to find the stocks that are returning the most cash to shareholders.
We’ve done the hard work for you: Here are the 7 stocks with the highest trailing 12-month combined buyback and dividend yield, plus a coveted Buy-rating from the Street. We turned to TipRanks market data to pinpoint the most attractive Buy-rating stocks from Goldman Sachs’ dividend basket stock list. Let’s take a closer look at the most compelling options now:
1. Marathon Petroleum (MPC – Research Report)
Trailing 12-month buyback + dividend yield: 16%
Analyst consensus: Strong Buy
This killer energy stock has 100% Street support right now.
“We like Marathon Petroleum for its diversified refining footprint across the Midwest, Rocky Mountains, Gulf Coast, and West Coast, which gives the company access to both inland and waterborne crude supplies” cheers five-star RBC Capital analyst Brad Heffern (Track Record & Ratings).
He notes that MPC recently acquired ANDV, and achieving a $1 billion synergy target would be a major catalyst for shares. Luckily MPC says it will “put to rest” any doubt about the $1 billion synergy target at its analyst day on December 4.
Another key share driver could come from Marathon’s retail business, Speedway. According to Heffern this “is the most attractive retail franchise in our coverage universe.” He believes the extension of the Speedway model to the acquired ANDV stores could provide meaningful upside.
