Some investors say that large share buybacks and dividend payouts make for strong stocks.
So Goldman Sachs put together a list of stocks with the greatest combination of trailing buyback and dividend yields. Buyback yields are the percentage of a company’s market capitalization returned to shareholders through stock buybacks.
Here are the top finishers.
1. Marathon Petroleum (MPC) -), the oil refiner. Buyback yield: 26%. Dividend yield: 3%. Total cash return yield: 29%.
2. Synchrony Financial (SYF) -), the credit card company. Buyback yield: 16%. Dividend yield: 3%. Total cash return yield: 19%.
3. M&T Bank (MTB) -). Buyback yield: 11%. Dividend yield: 4%. Total cash return yield: 15%.
3. Marathon Oil (MRO) -), the oil producer. Buyback yield: 14%. Dividend yield: 1%. Total cash return yield: 15%.
5. Cardinal Health (CAH) -), a leading drug wholesaler. Buyback yield: 10%. Dividend yield: 3%. Total cash return yield: 13%.
5. MGM Resorts (MGM) -). Buyback yield: 13%. Dividend yield: 0%. Total cash return: 13%.
5. Tapestry (TPR) -), a fashion company, including Coach brand. Buyback yield: 10%. Dividend yield: 3%. Total cash return yield: 13%.
8. C.H. Robinson Worldwide (CHRW) -), a logistics provider. Buyback yield: 10%. Dividend yield: 2%. Total cash return yield: 12%.
8. Expeditors International of Washington (EXPD) -), another logistics provider. Buyback yield: 11%. Dividend yield: 1%. Total cash return yield: 12%
Morningstar Assessments
Marathon Petroleum: Moat (durable competitive advantage): narrow. Fair value estimate: $126. Monday price quote: $154.
“Marathon has earned a narrow moat given its high-grade portfolio and operating cost improvements that lend greater confidence to our long-term forecast for excess returns,” wrote Morningstar analyst Allen Good.
“These returns are underpinned by a cost advantage relative to global refiners derived from access to low-cost feedstock and lower operating costs from low-cost domestic natural gas.”
Synchrony Financial: Moat: None. Fair value estimate: $42. Monday price quote: $31.70.
Synchrony Financial partners with retailers and medical providers to offer promotional financing as well as private-label and co-branded general-purpose credit cards.
“While the company’s CareCredit cards and installment loans have consistently performed well, its credit cards can often face material headwinds when retail sales suffer,” wrote Morningstar analyst Michael Miller.
