The artificial intelligence rally over the last year and a half, led by the so-called Magnificent 7, has been remarkable if you owned those stocks. However, most of the S&P 500 is treading water and will not likely catch up to the hype-driven AI stocks soon.

One thing remains certain: with storm clouds gathering on the horizon and the risk of an escalating conflict in the Middle East, many Wall Street strategists are cautious, predicting modest single-digit gains for the remainder of 2024. However, a significant 20% or more sell-off could also be possible.

Our May Goldman Sachs U.S. Conviction List screening has unearthed five top companies with solid total return potential and dependable dividends, presenting a promising opportunity for those seeking passive income. These stocks, among the world’s most prestigious investment bank’s top picks, are likely to attract the attention of savvy investors.

Why we recommend Goldman Sachs stocks

Goldman Sachs is the acknowledged leader in the investment landscape on Wall Street and worldwide. The firm’s top-notch research department continues to provide clients with the best ideas across the investing spectrum and is likely to continue to do so for years to come.

Ally Financial

With no buildings, the bank posted solid first-quarter earnings and paid a significant 3.05% dividend. Ally Financial Inc. (NYSE: ALLY), a pioneer in the digital financial services industry, offers a diverse range of innovative digital financial products and services to consumer, commercial, and corporate customers, primarily in the United States and Canada.

It operates through four segments:

• Automotive Finance Operations,
• Insurance Operations,
• Mortgage Finance Operations
• Corporate Finance Operations

The Automotive Finance Operations segment offers:

• Automotive financing services, including retail installment sales contracts
• Loans and operating leases
• Term loans to dealers
• Financing dealer floor plans and other lines of credit to dealers
• Warehouse lines to automotive retailers
• Fleet financing. It also provides financing services to companies and municipalities for the purchase or lease of vehicles and vehicle remarketing services.The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel, and commercial insurance products directly to dealers. This segment provides vehicle service and maintenance contracts and guaranteed asset protection products and underwrites commercial insurance coverages, which primarily insure dealers’ vehicle inventory.

The Mortgage Finance Operations segment manages a consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income mortgage loans originated by third parties and direct-to-consumer mortgage offerings.

The Corporate Finance Operations segment provides senior secured leveraged cash flow and asset-based loans to middle market companies, leveraged loans, and commercial real estate products to serve companies in the healthcare industry.

The company also offers commercial banking products and services, securities brokerage, and investment advisory services.

Blue Owl Capital

The Goldman Sachs team has expressed strong confidence in this asset management company, and the stock pays a solid 3% dividend. Blue Owl Capital Inc. (NYSE: OWL) operates as an asset manager, offering permanent capital base solutions that enable it to provide a robust platform to middle market companies, large alternative asset managers, and corporate real estate owners and tenants.

The company provides a comprehensive suite of financial solutions, including:

• 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 offer capital solutions, including GP minority equity investments, GP debt financing, and professional sports minority investments to large private capital managers; and real estate products that focuses on structuring sale-leaseback transactions, which includes triple net leases.

Jefferies Financial

This broker-dealer is an excellent idea for those looking for financials besides money center banks. It pays a 2.75% dividend. Jefferies Financial Group, Inc. (NYSE: JEF) engages in investment banking capital markets and asset management businesses in the Americas, Europe, the Middle East, Africa, and Asia.

The company operates in four segments:

• Investment Banking and Capital Markets
• Asset Management
• Merchant Banking
• Corporate 

 It provides investment banking, advisory services concerning mergers or acquisitions, restructurings or recapitalizations, private capital advisory transactions, equity and debt underwriting, and corporate lending.

In addition, Jefferies offers

• Financing
• Securities lending and other prime brokerage services
• Equities research and finance
• Wealth management services

In addition, it provides clients with:

• Sales and trading of investment grade corporate bonds, U.S. and European government and agency securities
• Municipal bonds, mortgage-backed and asset-backed securities
• Leveraged loans, consumer loans, high yield and distressed securities
• Emerging markets debt
• Interest rate and credit derivative products
• Foreign exchange trade execution and securitization.

It also manages, invests in, and provides services to various alternative asset management platforms across investment strategies and asset classes.

PPG Industries

Formerly known for years as Pittsburgh Paint and Glass, paying a solid 2% dividend this is a great stock idea now. PPG Industries, Inc. (NYSE: PPG) manufactures and distributes paints, coatings, and specialty materials in the United States, Canada, the Asia Pacific, Latin America, Europe, the Middle East, and Africa.

It operates through two segments:

• Performance Coatings and
• Industrial Coatings.

The Performance Coatings segment offers:

• Coatings
• Solvents
• Adhesives
• Sealants
• sundries
• Software for automotive and commercial transport/fleet repair and refurbishing,
• Light industrial coatings, and specialty coatings for signs
• Wood stains; paints, thermoplastics, pavement marking products, and other advanced technologies for pavement marking for government, commercial infrastructure, painting, and maintenance contractors
• Coatings, sealants, transparencies, transparent armor, adhesives, engineered materials, and packaging and chemical management services for commercial, military, regional jet, and general aviation aircraft

The Industrial Coatings segment offers coatings, adhesives and sealants, and metal pretreatments, as well as services and coatings applications for:

• Appliances, agricultural and construction equipment
• Consumer electronics, automotive parts and accessories,
• Building products
• Kitchenware
• Transportation vehicles, and other finished products; and on-site coatings services

It also provides coatings for metal cans, closures, plastic and aluminum tubes for food, beverage and personal care, promotional, and specialty packaging; amorphous precipitated silica for tires, battery separators, and other end-uses; TESLIN substrates for labels, e-passports, drivers’ licenses, breathable membranes, and loyalty and identification cards; and organic light emitting diode materials, displays and lighting lens materials, optical lenses, color-change products, and photochromic dyes

Target

This company remains a solid and safe retail total return play despite some rough public relations issues last year and pays a solid 2.67% dividend. Target Corp. (NYSE: TGT) is a general merchandise retailer in the United States.

The company offers apparel for women, men, boys, girls, toddlers, infants, and newborns, as well as jewelry, accessories, shoes, beauty and personal care, baby gear, cleaning, paper products, and pet supplies.

Target’s product portfolio is diverse, catering to a wide range of consumer needs. It offers:

• Dry grocery
• Dairy
• Frozen food
• Beverages
• Candy
• Snacks
• Deli
• Bakery
• Meat, and food service
• Electronics
• Toys
• Entertainment
• Sporting goods and luggage
• Furniture
• Lighting
• Storage
• Kitchenware
• Small appliances
• Home décor
• Bed and bath
• Home improvement
• School/office supplies
• Greeting cards and party supplies
• Seasonal merchandise

Target employs a multi-channel sales strategy, selling its merchandise through periodic design and creative partnerships, and shop-in-shop experiences. It also offers in-store amenities to enhance the shopping experience. The company’s products are available through its physical stores and digital channels, including Target.com.

The company suffered a “Bud Light” moment last year after disastrous merchandising of LBGTQ products struck a nerve with many shoppers. While not as bad as the beer giants’ conundrum, it still proved to be a huge negative that has seemingly subsided some.

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