GOLDMAN: Here are 10 great US stocks with fat dividends and huge buyback plans

Companies are sitting on record piles of cash, and that’s good news for investors in certain companies.

According to David Kostin at Goldman Sachs, S&P 500 companies will spend $US2.2 trillion in excess cash in 2016 and 46% of that will be returned to shareholders in the form of dividends or buybacks.

Additionally, the stocks of companies returning large amounts of cash to shareholders have done well over the past few years.

“Investing in companies returning cash to shareholders via a combination of buybacks and dividends has proven to be an effective long-term strategy relative to the market and other uses of cash,” wrote Kostin. “Since 1991, a sector-neutral basket of the S&P 500 stocks with the highest trailing combined dividend and buyback yields has returned an annualized 15.7% versus 13.8% for the top capex + R&D spenders and 12.8% for S&P 500.”

To help capture this trend, Goldman has assembled a list of the 50 top stocks for shareholder cash returns called the Total Cash Return basket.

We’ve compiled the top 10 stocks returning more than 12% yield to their investors. Each stock also includes the breakdown of returns from buybacks and dividends, as well as a comment on the returns from the company’s most recent earnings call.

Check out the companies dumping cash to investors below.

Marriott International: 12.0% total yield

Scott Olson/Getty Images

Ticker: MAR

Industry: Consumer Discretionary

Buyback Yield: 10.7%

Dividend Yield: 1.3%

Executive Comment: 'Given the considerable amount of capital recycling this year, combined with strong operating cash flow, we expect to return more than $US2.25 billion to shareholders through share repurchases and dividends this year, a new record. Year-to-date through today, we've already returned over $US2 billion to shareholders,' said CFO Carl Berquist.

Source: Goldman Sachs

Travellers Companies: 12.4% total yield


Ticker: TRV

Industry: Financials

Buyback Yield: 10.1%

Dividend Yield: 2.3%

Executive Comment: 'We continue to generate much more capital than we need to support our businesses and consistent with our ongoing capital management strategy we returned $US939 million of excess capital to our shareholders this quarter through dividends of $US189 million and common share repurchases of $US750 million bringing total capital return to shareholders to almost $US2.8 billion year to date,' said CFO Jay Benet.

Source: Goldman Sachs

Express Scripts Holdings: 12.6% total yield

Rick Scuteri/AP Images

Ticker: ESRX

Industry: Health Care

Buyback Yield: 12.6%

Dividend Yield: 0%

Executive Comment: 'My priorities from a financial perspective align with those of this leadership team -- to maximise return on invested capital, manage expenses and working capital, and optimise our capital structure. Through our business model of alignment, we manage trend to lower cost for our clients and improve the health outcomes for our members, resulting in enhanced value for our shareholders,' said CFO Eric Slusser.

Source: Goldman Sachs

Monsanto Co.: 12.8% total yield

Getty Images/Brent Stirton

Ticker: MON

Industry: Materials

Buyback Yield: 11.3%

Dividend Yield: 1.5%

Executive Comment: 'We remain committed to a balanced capital allocation strategy, balanced between continued share repurchases, dividends, capital investments and investments in technology. This should allow us to operate with flexibility to invest in high-growth opportunities that support our strategy while remaining committed to a solid investment-grade credit rating to allow access to commercial paper,' said CFO Pierre Courduroux.

Source: Goldman Sachs

Starwood Hotels & Resorts: 14.1% total yield

Ticker: HOT

Industry: Consumer Discretionary

Buyback Yield: 11.0%

Dividend Yield: 3.2%

Executive Comment: 'In the meantime we are enjoying the benefit of strong performance in our owned and leased business. On return of cash, we repurchased 1.3 million shares in the third quarter for a total cost of $US100 million and paid a quarterly dividend of $US0.375 per share or approximately $US64 million in total. Year-to-date, we have returned $US328 million through repurchases and $US192 million through dividends for a total of $US520 million. We're on track to deliver our stated goal to return $US600 million to shareholders this year,' said CFO Thomas Mangas.

Source: Goldman Sachs

Northrop Grumman: 15.5% total yield

NASA/Northrop Grumman

Ticker: NOC

Industry: Industrials

Buyback Yield: 13.2%

Dividend Yield: 2.4%

Executive Comment: 'That strategy is to invest in our businesses, manage our balance sheet and return cash to shareholders through a competitive dividend and share repurchases. Our first priority, of course, continues to be investing in our business. We have increased our IRAD and capital spending to support our customers' needs for innovation and affordability. We also have greater visibility into a more favourable opportunity set ahead of us. We believe our portfolio is well aligned for long-term profitable growth,' said CEO Wesley Bush.

Source: Goldman Sachs

Navient Corp: 16.7% total yield


Ticker: NAVI

Industry: Financials

Buyback Yield: 13.4%

Dividend Yield: 3.3%

Executive Comment: 'Our philosophy here and practice has been to as we generate excess capital, both through earnings and through the release of capital from the amortization of our loan portfolios that that would be returned to shareholders through share repurchases and dividends; I don't think anything has changed here on that side of the equation. Clearly, the current stock price would encourage us and makes it far more attractive for us to be more aggressive on that front,' said CEO Jack Remondi.

Source: Goldman Sachs

Bed Bath & Beyond: 18.7% total yield

Getty Images

Ticker: BBBY

Industry: Consumer Discretionary

Buyback Yield: 18.7%

Dividend Yield: 0%

Executive Comment: 'We are confident that we're making the appropriate investments to position our Company for long-term profitable growth and to further enhance shareholder value. To that end, our Board of Directors has authorised today a nearly $US2.5 billion share repurchase program that will commence after the completion of our current $US2 billion. Our Board took this action based upon its continued confidence in our Company's long-term growth potential, financial outlook and cash flow generation,' said CEO Steven Temares.

Source: Goldman Sachs

KLA-Tencor Corp.: 30.4% total yield

TGPRN KLA-Tencor Corporation

Ticker: KLAC

Industry: Information Technology

Buyback Yield: 5.1%

Dividend Yield: 25.3%

Executive Comment: 'Additionally in July, we announced that our Board of Directors had authorised an increase in the level of our quarterly dividend to $US0.52 per share, the seventh increase in our regular dividend since it was first instituted in 2005. We believe this reflects the board and management's confidence in our long-term growth strategies and target business model and is consistent with our ongoing focus of returning value and rewarding our long-term stockholders for their commitment to KLA-Tencor,' said CFO Bren Higgins.

Source: Goldman Sachs

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