Recently, the risk-off crowd has pushed the market higher following some stellar third-quarter earnings. Despite the gains, many investors are increasingly worried about a big sell-off ahead. Given the massive move since the market lows of March 2020, and the fact that we just recently had a 5% decline for the first time in almost a year, many get the sense that it is time to move to safer stocks that still have growth potential going forward but also pay a solid dividend that is dependable.
Despite some hand-wringing over higher interest rates, they remain near generational lows across the board. It is unlikely the Federal Reserve starts to increase rates for another year or perhaps longer.
We decided to screen the Goldman Sachs European Conviction List, which is a collection of the top equity ideas across the pond at the firm, looking for stocks that paid solid and dependable dividends that were higher than the S&P 500 yield of 1.31%. We found five that look like outstanding total return ideas now. They all are positioned well for the rest of 2021 and beyond, and importantly, they trade on American exchanges. We took the Goldman Sachs price target in the local currencies and converted it to U.S. dollars if no domestic price target was quoted.
It is important to remember that no individual research report should be used as the basis for any buying or selling decision.
ABB
Based in Switzerland, this is an ideal stock for more conservative investors. ABB Ltd. (NYSE: ABB) manufactures and sells electrification, industrial automation and robotics and motion products for customers in utilities, industry, transport and infrastructure worldwide.
Its Electrification segment provides electric vehicle charging infrastructure, renewable power solutions, modular substation packages, distribution automation products, switchboard and panel boards, switchgears, UPS solutions, circuit breakers, measuring and sensing devices, control products, wiring accessories, enclosures and cabling systems and intelligent home and building solutions for integrating and automating lighting, heating, ventilation, security and data communication networks.
The company’s Robotics & Discrete Automation segment provides industrial robots, software, robotic solutions and systems, field services, spare parts and digital services. This segment also offers solutions based on its programmable logic controllers, industrial PCs, servo motion, transport systems and machine vision.
The Industrial Automation segment develops and sells industry-specific, integrated automation, and electrification systems and solutions, as well as digital solutions, lifecycle services and artificial intelligence applications for the process and hybrid industries. This segment also offers process and discrete control technologies, advanced process control software and manufacturing execution systems, sensing, measurement, analytical instrumentation, electric ship propulsion systems and large turbochargers, as well as remote monitoring, preventive maintenance, asset performance management and cybersecurity services.
Shareholders receive a 1.93% yield. The Goldman Sachs price target on ABB stock in Swiss francs equals $52.14 in U.S. dollars. The Wall Street consensus target is much lower at $38.16, and shares closed on Wednesday at $35.04.
24/7 Wall St.BP
This is one of the premier European integrated oil giants, and Goldman Sachs is very positive on the shares. BP PLC (NYSE: BP) engages in the energy business worldwide. It produces and trades in natural gas; offers biofuels; operates onshore and offshore wind power and solar power generating facilities; and provides de-carbonization solutions and services, such as hydrogen and carbon capture, usage and storage.
The company is also involved in the convenience and mobility business, which manages the sale of fuels to wholesale and retail customers, convenience products, aviation fuels, and Castrol lubricants. It is involved in refining, supply and trading of oil products, as well as operation of electric vehicle charging facilities. In addition, it produces and refines oil and gas, and it invests in upstream, downstream and alternative energy companies, as well as in advanced mobility, bio and low carbon products, carbon management, digital transformation and power and storage areas.
Shareholders receive a 4.16% yield. The Goldman Sachs price target for the domestic shares is $45, while the consensus target on BP stock is $34.17. The final trade on Wednesday was reported at $30.13 a share.
Ericsson
This technology play also offers a dividend. Telefonaktiebolaget LM Ericsson (NASDAQ: ERIC) provides communication infrastructure, services and software solutions to the telecom and other sectors.
Its Networks segment offers hardware, software and related services for radio access and transport, as well as related services, such as design, tuning, network rollout and customer support. The Digital Services segment provides products and services for operators in the areas of business support systems, operations support systems, cloud core, cloud communication and cloud infrastructure, as well as consulting, learning and testing services.
The Managed Services segment offers networks and IT-managed network design and optimization, and application development and maintenance services to operators. The Emerging Business and Other segment consists of emerging businesses, including Internet of Things; iconectiv; Cradlepoint that provides wireless edge WAN 4G and 5G enterprise solutions; and Red Bee Media, MediaKind and other new businesses.
Ericsson stock investors receive a 1.37% dividend. The $16.70 Goldman Sachs price target for the domestic shares compares with a $16.99 consensus target and Wednesday’s closing share price of $11.84.
Novartis
This is among the world’s largest pharmaceutical drug makers by sales and remains a top international pick across Wall Street. Novartis AG (NYSE: NVS) develops, manufactures and markets a range of health care products worldwide.
Novartis operates through three segments: Pharmaceuticals, Alcon and Sandoz. The Pharmaceuticals segment offers patented prescription medicines for oncology, neuroscience, retina, immunology and dermatology, respiratory, cardio-metabolic, established medicines and cell and gene therapies. Key products include Cosentyx (for psoriasis and others), Entresto (heart failure), Lucentis (wet macular degeneration) and Gilenya (multiple sclerosis).
It was reported last month that the company has acquired Arctos Medical, adding a preclinical optogenetics-based AAV gene therapy program and Arctos’s proprietary technology to its ophthalmology portfolio. Arctos developed its technology as a potential method for treating inherited retinal dystrophies and other diseases that involve photoreceptor loss, such as age-related macular degeneration. Arctos’s proprietary, light-sensitive optogene is delivered to specific retinal cells using gene therapy, thus turning the targeted cells into replacement photoreceptor-like cells.
Investors receive a 2.466% dividend. The Goldman Sachs price target in Swiss francs equals $120.68. The consensus target is just $104.80. Novartis stock closed at $84.47 on Wednesday.
Vodafone
This European telecom company tends to fly under investors’ radar but makes very good sense now. Vodafone Group PLC (NASDAQ: VOD) engages in telecommunication services in Europe and elsewhere.
The company offers mobile services that enable customers to call, text and access data; fixed-line services, including broadband, television offerings and voice; and convergence services under the GigaKombi and Vodafone One names to customers.
Vodafone also provides value-added services, such as the Internet of Things, comprising logistics and fleet management, smart metering, insurance, cloud and security services, as well as automotive and health solutions. In addition, the company offers M-Pesa, an African payment platform, which provides money transfer, financial and business and merchant payment services. It offers various services to operators through its partner market agreements.
Vodafone has strategic partnerships with Open Fiber. As of March 31, 2021, it had approximately 315 million mobile customers, 28 million fixed broadband customers and 22 million TV customers.
Shareholders receive a 6.73% dividend. Goldman Sachs has set a $21.92 price target for Vodafone stock domestic shares. The consensus target is $23.71, and shares closed on Wednesday at $15.65.
These five top stocks on the Goldman Sachs European Conviction List all trade on American exchanges, have liquidity and pay very dependable dividends. One caveat for investors in the United States is that many foreign governments automatically withhold taxes on dividends paid by companies incorporated within their borders. This means that your broker may withhold a certain percentage of your dividend.
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