The Artificial Intelligence rally over the last year, led by the so-called “Magnificent 7,” has been fantastic if you owned those stocks. However, most of the S&P 500 is treading water and will not likely ever catch up to the hype-driven AI stocks soon.
With the market trading at all-time highs, investors will likely be lured into a false sense of financial security. The reality is the United States could be set for some troubling economic times in the second half of 2024.
The national debt is over $34 trillion, consumer credit card debt is a staggering $1.13 trillion, and many companies (especially the tech giants) are laying off thousands of workers to get balance sheets under control.
Considering those conditions, we screened the Goldman Sachs Conviction List of top stock picks, looking for the companies that paid the most significant dividends and six that looked like total return winners. All are rated Buy at Goldman Sachs, the premier investment bank in the world, and investors look to the legacy giant to provide some of the best stock ideas available.
Amgen
Amgen is committed to unlocking the potential of biology for patients suffering from serious illnesses.
The biotech giant remains a top stock for investors to buy and pays an outstanding 3.21% dividend. Amgen Inc. (NASDAQ: AMGN | AMGN Price Prediction) discovers, develops, manufactures, and delivers human therapeutics worldwide.
It focuses on:
- Inflammation
- Oncology/hematology
- Bone health
- Cardiovascular disease
- Nephrology
- Neuroscience
The company’s products include:
- Enbrel to treat plaque psoriasis, rheumatoid arthritis, and psoriatic arthritis
- Neulasta reduces the chance of infection due to a low white blood cell count in patients with cancer
- Prolia to treat postmenopausal women with osteoporosis
- Xgeva for skeletal-related events prevention
- Otezla is used to treat adult patients with plaque psoriasis, psoriatic arthritis, and oral ulcers associated with Behcet’s disease
- Aranesp to treat a lower-than-normal number of red blood cells and anemia
- KYPROLIS to treat patients with relapsed or refractory multiple myeloma.
- Repatha reduces the risks of myocardial infarction, stroke, and coronary revascularization
Blue Owl Capital
Blue Owl Capital is a specialty finance that provides direct lending solutions to U.S. middle-market companies.
The Goldman Sachs team is optimistic about this asset management company, and the stock pays a solid 3.11% dividend. Blue Owl Capital Inc. (NYSE: OWL) is an asset manager.
It offers permanent capital base solutions that enable it to provide a platform for middle market companies, large alternative asset managers, and corporate real estate owners and tenants.
The company provides:
- Direct lending products that offer private credit products comprising diversified, technology, first lien, and opportunistic lending to middle-market companies
- GP capital solutions products, which provide capital solutions, including GP minority equity investments, GP debt financing, and professional sports minority investments to large private capital managers
- Real estate products that focus on structuring sale-leaseback transactions, which include triple net leases
Chevron
The second-largest direct descendant of Standard Oil is headquartered in San Ramon, California.
This integrated giant is a safer way for investors looking to position themselves in the energy sector. It pays a rich 4.03% dividend, and Buffett added 16 million shares in the first quarter. Chevron Corporation (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries.
The company operates in two segments:
- Upstream
- Downstream
The Upstream segment is involved in the following:
- Exploration, development, production, and transportation of crude oil and natural gas;
- Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
- Transportation of crude oil through pipelines
- Transportation, storage, and marketing of natural gas, as well as operating a gas-to-liquids plant
The Downstream segment engages in:
- Refining crude oil into petroleum product
- Marketing crude oil, refined products, and lubricants
- Manufacturing and marketing renewable fuels
- Transporting crude oil and advanced products by pipeline, marine vessel, motor equipment, and rail car
- Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives
Chevron announced in the fall that it has entered into a definitive agreement with Hess Corporation (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion.
Simon Property Group
Simon Property Group is the largest owner of shopping malls in the United States.
This leading company has rallied big off the 2023 lows, pays a fat 5.18% dividend, and looks ready to break out. Simon Property Group Inc. (NYSE: SPG) invests in real estate markets worldwide.
It engages in property investment, ownership, management, and development. The company primarily invests in regional malls, premium outlets, mills, and community/lifestyle centers to create its portfolio.
Through its subsidiary partnership, it owns or has an interest in about 230 properties in the US and Asia. The company also has a 28.9% interest in Klepierre, a European REIT with over 260 shopping centers in 13 countries.
Southern Company
The company is the second largest utility company in the U.S. regarding customer base.
This large-cap utility leader pays a solid and dependable 4.19% dividend. Southern Company (NYSE: SO), through its subsidiaries, generates, transmits, and distributes electricity.
It operates through three segments:
- Gas Distribution Operations
- Gas Pipeline Investment
- Gas Marketing Services
The company also develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects, and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, as well as provides gas marketing services, gas distribution operations, and gas pipeline investments operations.
Southern Company serves approximately 8.8 million electric and gas utility customers and offers digital wireless communications and fiber optics services.
Target
According to the ratings issued by 27 analysts last year, the consensus rating for Target stock is a Moderate Buy.
Despite some rough public relations issues last year, Target Corp. (NYSE: TGT) remains a solid and safe retail total return play. It also pays a solid 3.17% dividend. Target Corp. is a general merchandise retailer in the United States.
The company offers apparel for women, men, boys, girls, toddlers, infants, and newborns, jewelry, accessories, shoes, beauty and personal care, baby gear, cleaning, paper products, and pet supplies.
Target also provides:
- Dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat, and food service
- Electronics, which includes video game hardware and software, toys, entertainment, sporting goods
- Luggage and furniture, lighting, storage, kitchenware, small appliances
- Home décor, bed and bath, home improvement
- School/office supplies,
- Greeting cards, party supplies, and other seasonal merchandise.
In addition, the company sells merchandise through periodic design and creative partnerships, shop-in-shop experiences, and in-store amenities. Further, it sells its products through stores and digital channels, including Target.com.
Last year, the company suffered a “Bud Light” moment after disastrous merchandising of LBGTQ products that struck a nerve with many shoppers. While not as bad as the beer giants’ problem, it was still a huge negative that has seemingly subsided.
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