We finally made it: 2021 is here. Hopefully, many of the issues that were difficult in 2020 will start to fade this year as the country returns to a more normal status. With the COVID-19 vaccine being distributed around the country, many feel that by summertime travel, dining and many other normal, everyday pursuits could return. With the stock market finishing 2020 right near all-time highs, the playbook for this year could be far different.

We screened the Goldman Sachs Americas Conviction list looking for companies and sectors that either were somewhat out of favor in 2020 or were affected in normal operations by the extenuating circumstances caused by the pandemic and the actions that were taken as a result.

All these stocks are of course rated Buy, as the Conviction List is the top stock picks at Goldman Sachs. We also screened for companies that pay dependable dividends, because after 2020’s massive gains, especially on the Nasdaq, this year may be one of consolidation and continued rotation. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Eli Lilly

This large-cap pharmaceutical on the Conviction List has solid upside potential and is a great pick for conservative investors. Eli Lilly and Co. (NYSE: LLY) is a global health care company with numerous core products in a number of primary-care pharmaceutical markets. The company generates revenues from its pharmaceutical product and animal health segments.

The product portfolio includes Zyprexa (for schizophrenia and bipolar disorder), Gemzar (pancreatic cancer), Evista (osteoporosis), Cymbalta (depression), Cialis (erectile dysfunction), Strattera (attention deficit hyperactivity disorder), Erbitux (cancer) and Alimta (chemotherapy). Eli Lilly also has a strong presence in the diabetes market.

Recently, Eli Lilly announced better than expected 2021 guidance, raising 2020 ranges on both top and bottom lines. COVID-19-related revenue of $1 billion to $2 billion is a bonus on top of the company’s already strong commercial portfolio. Its $880 million Prevail acquisition fills a hole in the pipeline.

Eli Lilly announced last month that it is increasing its quarterly dividend by 15%. It will pay its first $0.85 per share distribution next March 10 to investors of record as of February. The increase in the dividend will push the yield to a 2.01% yield.

Goldman Sachs has a $209 price target for Eli Lilly stock. That is well above the Wall Street consensus target of $168.65, and the most recent closing price of $168.84 per share.

This is a solid way for more conservative investors to play the energy sector. Marathon Petroleum Corp. (NYSE: MPC) is one of the largest independent petroleum refining and marketing companies in the United States.

Until just recently, the company operated approximately 2,750 retail sites under the Marathon and Speedway brands. In addition, it operates a logistics network of pipelines, barges, trucks and terminals that store and transport crude and products.

Last August, the company announced it would sell Speedway to 7-11 in an all-cash deal valued at $21 billion, or $16.5 billion after-tax. The sale transforms the company’s balance sheet and creates options to revisit the corporate structure of MPLX. Many on Wall Street feel that with Speedway removed, the dislocation in refining value becomes even more transparent as the company trades much cheaper than its industry peers do.

The analysts said this at the time in reference to the Speedway sale:

The company has indicated that it will significantly strengthen its balance sheet with the cash and return excess capital to shareholders in the form of buybacks. While Exxon trades at a valuation premium to its sum-of-the-parts, we continue to highlight that Marathon Petroleum trades at a discount to its sum-of-the-parts valuation.

Shareholders receive a robust 5.61% dividend. The Goldman Sachs price target is $49, and the consensus target is lower at $46.27. Marathon Petroleum stock closed most recently at $41.36.

Mondelez

This consumer sector giant also makes good sense for conservative investors. Mondelez International Inc. (NASDAQ: MDLZ) manufactures and markets snack food and beverage products worldwide. It offers biscuits, including cookies, crackers and salted snacks; chocolates, and gums and candies; powdered beverages and coffee; and cheese and grocery products.

Its primary brand portfolio includes LU, Nabisco and Oreo biscuits; Cadbury, Cadbury Dairy Milk and Milka chocolates; Trident gum; Jacobs Kaffee; and Tang powdered beverages.

Mondelez sells its products to supermarket chains, wholesalers, supercenters, club stores, mass merchandisers, distributors, convenience stores, gasoline stations, drug stores, value stores and other retail food outlets through direct store delivery, company-owned and satellite warehouses, distribution centers and other facilities, as well as through independent sales offices and agents.

Shareholders receive a 2.15% dividend. The $67 Goldman Sachs price target compares with the $61.37 consensus target. Mondelez stock closed at $58.47 per share.

This top transport looks like a solid pick for the first quarter and all of 2021. Norfolk Southern Corp. (NYSE: NSC), together with its subsidiaries, engages in the rail transportation of raw materials, intermediate products and finished goods.

The company also transports overseas freight through various Atlantic and Gulf Coast ports, provides logistics services and operates scheduled passenger trains. In addition, the company engages in the acquisition, leasing and management of coal, oil, gas and minerals; development of commercial real estate and telecommunications; and leasing or sale of rail property and equipment.

Investors in Norfolk Southern stock receive a 1.58% dividend. Goldman Sachs has set a $265 price objective. The consensus figure is just $207.26, but shares were last seen trading at $237.61 apiece.

Raytheon Technologies

This stock is down a stunning 20% versus this time last year and offers perhaps the best value in the defense and aerospace sector. Raytheon Technologies Corp. (NYSE: RTX) is an industry leader in defense, government electronics, space, information technology and technical services.

With a history of innovation spanning 97 years, Raytheon provides state-of-the-art electronics, mission systems integration, C5I products and services, sensing, effects and mission support for customers in more than 80 countries.

In 2019, United Technologies and Raytheon agreed to merge their businesses to create a new aerospace and defense powerhouse. The two companies received unanimous approval from their respective boards, and the merger is finally complete, with the new company now called Raytheon Technologies.

Shareholders receive a 2.66% dividend. The Goldman Sachs price objective is $91. The posted consensus target is $78.05, and Raytheon Technologies stock closed at $71.51.

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These five top stocks from the Goldman Sachs Americas Conviction List for 2021 offer investors a degree of safety and total return potential. All make sense for long-term growth investors looking to add to their equity weighting but wanting to avoid overbought and crowded trades.

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