Goldman says these types of dividend stocks are the best to own in wake of big Meta payout news

Published Mon, Feb 12 20241:19 PM EST

Meta Platforms' big payout news augurs well for a group of dividend-paying stocks, according to Goldman Sachs. The Wall Street firm raised its dividend per share growth forecast for the S & P 500 in 2024, to 6% from 4% previously, according to a Friday note from chief U.S. equity strategist David J. Kostin. He cited better-than-expected earnings growth, a peak in bond yields, as well as easier comparisons from the year-ago period for the rosy outlook. Notably, Goldman Sachs anticipates Meta 's dividend initiation alone raises S & P 500 2024 DPS growth by just under 1%, after the Facebook parent company's announcement this month put the spotlight on dividend payers. For investors, that suggests opportunity in certain dividend stocks, Kostin wrote. Since late 2022, Goldman Sachs' Dividend Yield and Growth basket (GSTHDIVG), a 50-stock, equal-weighted basket of stocks with high trailing dividend yield and high anticipated dividend growth, has outperformed the equal-weighted S & P 500 by 3 percentage points. That's performed better than the firm's selection of stocks with high dividend yield factor and the Dividend Aristocrats Index, which underperformed the equal-weighted broader index by 7 percentage points and 6 percentage points, respectively. What's more, the GSTHDIVG is trading at an 18% price-to-earnings discount, compared to the equal-weighted index, the firm noted. As of October, here are some of the stocks in the firm's dividend yield and growth basket. Truist Financial The optimistic dividend per share growth outlook in 2024 is supported in part by 56 S & P 500 companies, which have already announced dividend raises this year, by 6% on average. Of them, the largest share of increases come from financial stocks. One financial stock in the GSTHDIVG is Truist Financial . In 2023, it had a dividend yield of more than 7%. Other Wall Street firms also like the stock. In January, Bank of America upgraded Truist to buy from neutral, citing three reasons including its strong balance sheet ahead of anticipated rate cuts from the Federal Reserve this year. Shares are down nearly 2% in 2024. Viatris Another stock in the portfolio is drugmaker Viatris . The health-care stock is up by more than 9% this year, but listed negative returns from 2018 to 2022. Last year, it had a roughly 5% dividend yield. In January, Greenlight Capital's David Einhorn disclosed a position in Viatris after ending his buyer's strike, citing stabilization in generic drug pricing that could boost the stock. Verizon Communications Communication services stock Verizon Communications is a constituent in the dividend growth basket. It had an 8% dividend yield in 2023. Morgan Stanley, which has an overweight rating on the stock, last week said it was more optimistic on Verizon following a sell-side briefing hosted by the telecommunications giant. Analyst Simon Flannery underscored "growing momentum" at the company. Shares of Verizon are up 6% in 2024. Other stocks in Goldman's dividend growth basket include Best Buy , Conagra Brands and Devon Energy . — CNBC's Michael Bloom contributed to this report.