Topline: As the coronavirus outbreak continues to take its toll on global markets, many cash-strapped companies—like Boeing, Ford, Darden Restaurants, and Marriott International—are cutting dividends to conserve cash during the crisis. Across the S&P 500, Goldman Sachs is predicting that dividends will fall by 25% this year and earnings-per-share will fall by 33%.
There are still good buys to be found, however. Below are ten high-yielding dividend stocks from a pool of 40 identified by Goldman Sachs. To narrow down the list, Goldman’s analysts picked from top-performing Russell 1000 companies with annualized dividend yields above 3% and S&P ratings above BBB+. The full list can be found in the table below.
- In the consumer discretionary sector, Home Depot (HD) has an annual dividend yield of 3.1%. The company has committed to closing its stores at 6 p.m. each day and offering its workers additional paid time off during the crisis.
- Advertising and communications giant Omnicom Group (OMC) yields 5% annually.
- In the consumer staples sector, Goldman picks Archer-Daniels-Midland (ADM) and Sysco Corp. (SYY). They have dividend yields of 4.3% and 3.6%, respectively.
- In the financial services sector, Wells Fargo & Co. (WFC)—which is offering offering fee waivers and payment deferrals to customers impacted by the virus—and Franklin Resources (BEN) both have annual dividend yields above 6%.
- In the healthcare sector, Bristol-Myers Squibb (BMY) is Goldman’s top choice. It has a dividend yield of 3.4%.
- 3M Co. (MMM), which makes personal protective equipment along with scores of other industrial products, has a 4.4% annual dividend yield.
- Blue-chip information technology and consulting giant International Business Machines (IBM)’s dividend yields 6% annually. Last week, IBM partnered with the White House to help direct supercomputing resources towards coronavirus research.
- In the utilities sector, CenterPoint Energy (CNP) has an annual dividend yield of 7.1%.
Key background: Last week, President Trump signed into law a historic economic recovery package worth a staggering $2 trillion. The bill includes a $425 billion fund for distressed companies to access loans from the Federal Reserve. $50 billion has been set aside for airlines alone. The bill also stipulates, however, that companies that borrow money from the government through that fund cannot repurchase shares, pay a dividend, or make any other capital distributions until one year after the loan has been fully repaid. Companies that do not accept government money are not subject to these restrictions.
