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9 Top Picks From Goldman's Dividend Growth Basket

Dividends are so important for income investors, especially when you reinvest all of your fresh dividend payment to fund new stock positions.

Overall, dividends will provide about half the total returns for equity investors in the next decade, that's a major guide each analyst tells you when we are discussing the dividend growth strategies.

Today I like to refer a great basket from Goldman Sachs, the Dividend Growth Basket. Each stock of the list has a median yield of 2.5% and is expected to increase dividends by 16% in 2015 and 12% in 2016. The basket has a price-to-earnings ratio of 15 vs. 17.3 for the S&P.

That sounds very interesting, right? Well let us look at the detailed results. Here are the best picks from each industry. Which do you like?

Verizon Communications -- Yield: 4.66%

Verizon Communications (NYSE:VZ) employs 176,200 people, generates revenue of $127,079.00 million and has a net income of $11,956.00 million. The current market capitalization stands at $191.85 billion.

Verizon Communications’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $43,239.00 million. The EBITDA margin is 34.03% (the operating margin is 15.42% and the net profit margin 9.41%).

Financials: The total debt represents 48.68% of Verizon Communications assets and the total debt in relation to the equity amounts to 921.05%. Due to the financial situation, a return on equity of 37.65% was realized by Verizon Communications.

Twelve trailing months earnings per share reached a value of $2.39. Last fiscal year, Verizon Communications paid $2.16 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 19.66, the P/S ratio is 1.51 and the P/B ratio is finally 15.95. The dividend yield amounts to 4.66%.

Stock Charts:

Long-Term Stock Price Chart of Verizon Communications (VZ)
Long-Term Stock Price Chart of Verizon Communications (VZ)
Long-Term Dividend Payment History of Verizon Communications (VZ)
Long-Term Dividend Payment History of Verizon Communications (VZ)
Long-Term Dividend Yield History of Verizon Communications (VZ)
Long-Term Dividend Yield History of Verizon Communications (VZ)

Seagate Technology -- Yield: 4.49%

Seagate Technology (NASDAQ:STX) employs 52,100 people, generates revenue of $13,724.00 million and has a net income of $1,570.00 million. The current market capitalization stands at $14.93 billion.

Seagate Technology’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $2,679.00 million. The EBITDA margin is 19.52% (the operating margin is 12.94% and the net profit margin 11.44%).

Financials: The total debt represents 41.30% of Seagate Technology assets and the total debt in relation to the equity amounts to 138.42%. Due to the financial situation, a return on equity of 49.63% was realized by Seagate Technology.

Twelve trailing months earnings per share reached a value of $5.75. Last fiscal year, Seagate Technology paid $1.67 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 8.19, the P/S ratio is 1.11 and the P/B ratio is finally 5.55. The dividend yield amounts to 4.49%.

Stock Charts:

Long-Term Stock Price Chart of Seagate Technology (STX)
Long-Term Stock Price Chart of Seagate Technology (STX)
Long-Term Dividend Payment History of Seagate Technology (STX)
Long-Term Dividend Payment History of Seagate Technology (STX)
Long-Term Dividend Yield History of Seagate Technology (STX)
Long-Term Dividend Yield History of Seagate Technology (STX)

WEC Energy Group -- Yield: 3.92%

WEC Energy Group (NYSE:WEC) employs 4,248 people, generates revenue of $4,997.10 million and has a net income of $588.30 million. The current market capitalization stands at $14.64 billion.

WEC Energy Group’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,531.50 million. The EBITDA margin is 30.65% (the operating margin is 22.25% and the net profit margin 11.77%).

Financials: The total debt represents 34.48% of WEC Energy Group assets and the total debt in relation to the equity amounts to 117.48%. Due to the financial situation, a return on equity of 13.60% was realized by WEC Energy Group.

Twelve trailing months earnings per share reached a value of $2.54. Last fiscal year, WEC Energy Group paid $1.56 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 18.29, the P/S ratio is 2.95 and the P/B ratio is finally 2.38. The dividend yield amounts to 3.92%.

Stock Charts:

Long-Term Stock Price Chart of WEC Energy Group (WEC)
Long-Term Stock Price Chart of WEC Energy Group (WEC)
Long-Term Dividend Payment History of WEC Energy Group (WEC)
Long-Term Dividend Payment History of WEC Energy Group (WEC)
Long-Term Dividend Yield History of WEC Energy Group (WEC)
Long-Term Dividend Yield History of WEC Energy Group (WEC)

Host Hotels and Resorts -- Yield: 3.90%

Host Hotels and Resorts (NYSE:HST) employs 251 people, generates revenue of $5,354.00 million and has a net income of $747.00 million. The current market capitalization stands at $15.69 billion.

Host Hotels and Resorts’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,348.00 million. The EBITDA margin is 25.18% (the operating margin is 13.26% and the net profit margin 13.95%).

Financials: The total debt represents 32.70% of Host Hotels and Resorts assets and the total debt in relation to the equity amounts to 54.42%. Due to the financial situation, a return on equity of 10.05% was realized by Host Hotels and Resorts.

Twelve trailing months earnings per share reached a value of $0.84. Last fiscal year, Host Hotels and Resorts paid $0.75 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 24.51, the P/S ratio is 2.90 and the P/B ratio is finally 2.11. The dividend yield amounts to 3.90%.

Stock Charts:

Long-Term Stock Price Chart of Host Hotels and Resorts (HST)
Long-Term Stock Price Chart of Host Hotels and Resorts (HST)
Long-Term Dividend Payment History of Host Hotels and Resorts (HST)
Long-Term Dividend Payment History of Host Hotels and Resorts (HST)
Long-Term Dividend Yield History of Host Hotels and Resorts (HST)
Long-Term Dividend Yield History of Host Hotels and Resorts (HST)

National-Oilwell Varco -- Yield: 3.88%

National-Oilwell Varco (NYSE:NOV) employs 54,540 people, generates revenue of $21,440.00 million and has a net income of $2,455.00 million. The current market capitalization stands at $17.88 billion.

National-Oilwell Varco’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $4,496.00 million. The EBITDA margin is 20.97% (the operating margin is 16.85% and the net profit margin 11.45%).

Financials: The total debt represents 9.43% of National-Oilwell Varco assets and the total debt in relation to the equity amounts to 15.30%. Due to the financial situation, a return on equity of 11.42% was realized by National-Oilwell Varco.

Twelve trailing months earnings per share reached a value of $5.18. Last fiscal year, National-Oilwell Varco paid $1.64 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 8.90, the P/S ratio is 0.86 and the P/B ratio is finally 0.96. The dividend yield amounts to 3.88%.

Stock Charts:

Long-Term Stock Price Chart of National-Oilwell Varco (NOV)
Long-Term Stock Price Chart of National-Oilwell Varco (NOV)
Long-Term Dividend Payment History of National-Oilwell Varco (NOV)
Long-Term Dividend Payment History of National-Oilwell Varco (NOV)
Long-Term Dividend Yield History of National-Oilwell Varco (NOV)
Long-Term Dividend Yield History of National-Oilwell Varco (NOV)

Pfizer -- Yield: 3.36%

Pfizer (NYSE:PFE) employs 78,300 people, generates revenue of $49,605.00 million and has a net income of $9,120.00 million. The current market capitalization stands at $205.70 billion.

Pfizer’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $20,198.00 million. The EBITDA margin is 40.72% (the operating margin is 25.66% and the net profit margin 18.39%).

Financials: The total debt represents 21.67% of Pfizer assets and the total debt in relation to the equity amounts to 51.45%. Due to the financial situation, a return on equity of 12.32% was realized by Pfizer.

Twelve trailing months earnings per share reached a value of $1.45. Last fiscal year, Pfizer paid $1.04 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 23.10, the P/S ratio is 4.14 and the P/B ratio is finally 2.95. The dividend yield amounts to 3.36%.

Stock Charts:

Long-Term Stock Price Chart of Pfizer (PFE)
Long-Term Stock Price Chart of Pfizer (PFE)
Long-Term Dividend Payment History of Pfizer (PFE)
Long-Term Dividend Payment History of Pfizer (PFE)
Long-Term Dividend Yield History of Pfizer (PFE)
Long-Term Dividend Yield History of Pfizer (PFE)

International Paper -- Yield: 3.34%

International Paper (NYSE:IP) employs 58,000 people, generates revenue of $23,617.00 million and has a net income of $749.00 million. The current market capitalization stands at $20.11 billion.

International Paper’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3,874.00 million. The EBITDA margin is 16.40% (the operating margin is 6.41% and the net profit margin 3.17%).

Financials: The total debt represents 32.68% of International Paper assets and the total debt in relation to the equity amounts to 183.25%. Due to the financial situation, a return on equity of 8.59% was realized by International Paper.

Twelve trailing months earnings per share reached a value of $2.27. Last fiscal year, International Paper paid $1.45 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 21.03, the P/S ratio is 0.85 and the P/B ratio is finally 3.94. The dividend yield amounts to 3.34%.

Stock Charts:

Long-Term Stock Price Chart of International Paper (IP)
Long-Term Stock Price Chart of International Paper (IP)
Long-Term Dividend Payment History of International Paper (IP)
Long-Term Dividend Payment History of International Paper (IP)
Long-Term Dividend Yield History of International Paper (IP)
Long-Term Dividend Yield History of International Paper (IP)

Lockheed Martin -- Yield: 3.20%

Lockheed Martin (NYSE:LMT) employs 112,000 people, generates revenue of $45,600.00 million and has a net income of $3,614.00 million. The current market capitalization stands at $59.12 billion.

Lockheed Martin’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $7,047.00 million. The EBITDA margin is 15.45% (the operating margin is 12.26% and the net profit margin 7.93%).

Financials: The total debt represents 16.64% of Lockheed Martin assets and the total debt in relation to the equity amounts to 181.44%. Due to the financial situation, a return on equity of 86.90% was realized by Lockheed Martin.

Twelve trailing months earnings per share reached a value of $11.08. Last fiscal year, Lockheed Martin paid $5.49 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 16.95, the P/S ratio is 1.29 and the P/B ratio is finally 17.30. The dividend yield amounts to 3.20%.

Stock Charts:

Long-Term Stock Price Chart of Lockheed Martin (LMT)
Long-Term Stock Price Chart of Lockheed Martin (LMT)
Long-Term Dividend Payment History of Lockheed Martin (LMT)
Long-Term Dividend Payment History of Lockheed Martin (LMT)
Long-Term Dividend Yield History of Lockheed Martin (LMT)
Long-Term Dividend Yield History of Lockheed Martin (LMT)

Coca-Cola Enterprises -- Yield: 2.60%

Coca-Cola Enterprises (NYSE:CCE) employs 11,650 people, generates revenue of $8,264.00 million and has a net income of $663.00 million. The current market capitalization stands at $9.93 billion.

Coca-Cola Enterprises’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,422.00 million. The EBITDA margin is 17.21% (the operating margin is 12.33% and the net profit margin 8.02%).

Financials: The total debt represents 46.26% of Coca-Cola Enterprises assets and the total debt in relation to the equity amounts to 276.17%. Due to the financial situation, a return on equity of 35.73% was realized by Coca-Cola Enterprises.

Twelve trailing months earnings per share reached a value of $2.59. Last fiscal year, Coca-Cola Enterprises paid $1.00 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 16.42, the P/S ratio is 1.22 and the P/B ratio is finally 7.22. The dividend yield amounts to 2.60%.

Stock Charts:

Long-Term Stock Price Chart of Coca-Cola Enterprises (CCE)
Long-Term Stock Price Chart of Coca-Cola Enterprises (CCE)
Long-Term Dividend Payment History of Coca-Cola Enterprises (CCE)
Long-Term Dividend Payment History of Coca-Cola Enterprises (CCE)
Long-Term Dividend Yield History of Coca-Cola Enterprises (CCE)
Long-Term Dividend Yield History of Coca-Cola Enterprises (CCE)

Goldman's Dividend Growth Basket (click to enlarge)

4 comments:

  1. Thanks for providing great ideas so frequently. I think STX is a solid buy at such a low P/E. I'm surprised to see earnings growth being maintained--although AMDs warning yesterday gives me a little pause and will want to see how STX is being affected.

    Thanks!

    Eric

    ReplyDelete
  2. VZ, NOV & LMT are on my watchlist and I just added STX to it.
    Thanks for the post!

    Best wishes, DfS

    ReplyDelete
  3. Anonymous7/19/2015

    After PE and Yield, is the debt to equity the next most important thing? I noticed VZ is off the charts. STX is pretty high too..NOV is low WEC is high. I like STX best right here.

    ReplyDelete
  4. Anonymous7/19/2015

    what are the author's favorites from GS basket and why?

    ReplyDelete

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