GOLDMAN: The 27 Best Stocks With Huge Dividends And Giant Buyback Plans

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Photo: 401(K) 2012 / Flickr

Goldman Sachs’ Robert D. Boroujerdi and his team recently published the firm’s Income Book, which includes dividend and buyback investment strategies.Their favourite strategy involves buying stocks with a combination of high dividend yields and rich share buyback plans.

Goldman hand-picked 27 buy-rated stocks from across industries.  Pharmaceuticals, rail, consumer and financials are all represented.

The list is ranked according to dividend yield plus earnings per share accretion from buybacks.

NOTE: Earnings per share accretion occurs because buybacks lower share counts and therefore boost EPS.

TE Connectivity Ltd.

Ticker: TEL

Price Target
$45

Dividend Yield
2.3%

EPS Accretion From Buybacks
2.7%

Accretion + Yield
5%

Description: TE supplies connectors for the telecommunications industry. It's hiring 3,000 new employees in Bangalore.

Source: Goldman Sachs

Cummins Inc.

Ticker: CMI

Price Target
$116

Dividend Yield
2%

EPS Accretion From Buybacks
3%

Accretion + Yield
5%

Description: Cummins manufactures engines and motor vehicle parts. It just signed a partnership with Hyundai to build mid-range engines.

Source: Goldman Sachs

INVESCO

Ticker: GLW

Price Target
$28.50

Dividend Yield
2.7%

EPS Accretion From Buybacks
2.6%

Accretion + Yield
5.3%

Description: Invesco is an investment management service company. It recently announced it's expanding into India.

Source: Goldman Sachs

Corning Inc.

Ticker: GLW

Price Target
$16

Dividend Yield
2.4%

EPS Accretion From Buybacks
3.2%

Accretion + Yield
5.5%

Description: Corning makes specialty glass and ceramic products. Goldman just upgraded the stock.

Source: Goldman Sachs

St. Jude Medical

Ticker: STJ

Price Target
$48

Dividend Yield
2.1%

EPS Accretion From Buybacks
3.5%

Accretion + Yield
5.6%

Description: St. Jude develops medical technology. Wells Fargo recently reaffirmed the stock's 'outperform' rating.

Source: Goldman Sachs

JP Morgan

Ticker: JPM

Price Target
$42

Dividend Yield
2.9%

EPS Accretion From Buybacks
2.7%

Accretion + Yield
5.7%

Description: JPMorgan is an investment bank. Seeking Alpha says the stock is 'deeply discounted and ready to soar long term.'

Source: Goldman Sachs

Baxter

Ticker: BAX

Price Target
$68

Dividend Yield
2.5%

EPS Accretion From Buybacks
3.5%

Accretion + Yield
6%

Description: Baxter develops pharmaceutical products. It just set an annual sales-growth target of 5 per cent.

Source: Goldman Sachs

Republic

Ticker: RSG

Price Target
$32

Dividend Yield
3.3%

EPS Accretion From Buybacks
2.9%

Accretion + Yield
6.2%

Description: Republic is a waste management company. It saw huge YOY Q2 gains.

Source: Goldman Sachs

JM Smucker

Ticker: SJM

Price Target
$90

Dividend Yield
2.3%

EPS Accretion From Buybacks
3.9%

Accretion + Yield
6.2%

Description: Smucker makes food. It generated $713.0 million cash while it booking net income of $459.1 million in the past year, turning 12.5% of its revenue into free cash flow.

Source: Goldman Sachs

Campbell Soup

Ticker: CPB

Price Target
$39

Dividend Yield
3.4%

EPS Accretion From Buybacks
3.3%

Accretion + Yield
6.7%

Description: Campbell makes food. The stock has rallied on new CEO Denise Morrison's 'aggressive, painful' moves.

Source: Goldman Sachs

Exxon

Ticker: XOM

Price Target
$98

Dividend Yield
2.4%

EPS Accretion From Buybacks
4.7%

Accretion + Yield
7.1%

Description: Exxon is an oil company. It hit a 52-week high on India expansion.

Source: Goldman Sachs

Western Union

Ticker: WU

Price Target
$22

Dividend Yield
2.2%

EPS Accretion From Buybacks
4.9%

Accretion + Yield
7.1%

Description: Western Union is a financial transactions company. It's now expanding into Mexico.

Source: Goldman Sachs

CSX

Ticker: CSX

Price Target
$24

Dividend Yield
2.5%

EPS Accretion From Buybacks
4.9%

Accretion + Yield
7.4%

Description: CSX is a rail car manufacturer. It recently upgraded by Bernstein to 'market perform.'

Source: Goldman Sachs

Walgreen

The Blackstone Group

Ticker: PFE

Price Target
$17.50

Dividend Yield
5.4%

EPS Accretion From Buybacks
2.5%

Accretion + Yield
7.9%

Description: Blackstone is a private equity firm. It now the largest home buyer in the country.

Source: Goldman Sachs

Pfizer

Ticker: PFE

Price Target
$28

Dividend Yield
3.2%

EPS Accretion From Buybacks
4.8%

Accretion + Yield
7.9%

Description: Pfizer makes drugs. It continues expanding in China, where it just hired 600 new workers.

Source: Goldman Sachs

Williams-Sonoma

Ticker: WSM

Price Target
$48

Dividend Yield
2%

EPS Accretion From Buybacks
6.4%

Accretion + Yield
8.5%

Description: Williams-Sonoma is a retail household products company. It beat on earnings and revenues last quarter.

Source: Goldman Sachs

Validus Holdings

Ticker: VR

Price Target
$40

Dividend Yield
3.3%

EPS Accretion From Buybacks
5.6%

Accretion + Yield
8.5%

Description: Validus is an insurance company. It bought reinsurance competitor Flagstone Re last month for $623 million.

Source: Goldman Sachs

BlackRock

Ticker: BLK

Price Target
$210

Dividend Yield
3.3%

EPS Accretion From Buybacks
6.4%

Accretion + Yield
8.5%

Description: BlackRock is a fund manager. It is well positioned to take advantage of new federal hedge fund advertising rules.

Source: Goldman Sachs

Marathon

Ticker: MPC

Price Target
$66

Dividend Yield
2.2%

EPS Accretion From Buybacks
6.4%

Accretion + Yield
8.6%

Description: Marathon is an oil company. It just purchased a refinery from BP.

Source: Goldman Sachs

Norfolks Southern

Ticker: NSC

Price Target
$78

Dividend Yield
3%

EPS Accretion From Buybacks
6.7%

Accretion + Yield
9.6%

Description: Norfolk makes rail cars. It remains poised to benefit from natural gas drilling.

Source: Goldman Sachs

Coca-Cola

Ticker: CCE

Price Target
$35

Dividend Yield
3%

EPS Accretion From Buybacks
6.7%

Accretion + Yield
9.6%

Description: Coca-Cola makes drinks. It reached a near two-year high last month.

Source: Goldman Sachs

Lowe's

Ticker: LOW

Price Target
$33

Dividend Yield
2.2%

EPS Accretion From Buybacks
9.7%

Accretion + Yield
11.8%

Description: Lowe's is a retail home improvement company. S&P recently reaffirmed its A- rating and removed them from their CreditWatch warning list.

Source: Goldman Sachs

Ameriprise

Ticker: AMP

Price Target
$64

Dividend Yield
2.5%

EPS Accretion From Buybacks
9.4%

Accretion + Yield
11.9%

Description: Ameriprise is a financial planning company. It's rumoured to be on the verge of purchasing ING.

Source: Goldman Sachs

Time Warner

Ticker: TWX

Price Target
$44

Dividend Yield
2.3%

EPS Accretion From Buybacks
11%

Accretion + Yield
13.2%

Description: TimeWarner is a cable and Internet provider. It's up more than 50 per cent in 2012, and is about to add NFL Network.

Source: Goldman Sachs

travellers Inc.

Ticker: TRV

Price Target
$75

Dividend Yield
2.6%

EPS Accretion From Buybacks
14.9%

Accretion + Yield
17.5%

Description: Traverlers is an insurance company. It hit an all-time high last month on rising insurance rates.

Source: Goldman Sachs

Assurant Inc.

Ticker: AIZ

Price Target
$45

Dividend Yield
2.1%

EPS Accretion From Buybacks
19.0%

Accretion + Yield
21.1%

Description: Assurant is an insurance company. Fitch recently affirmed two of the company's operating units as 'stable' based on improved financial performance.

Source: Goldman Sachs

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