15 cheap stock picks to buy for big buybacks, dividends

15 cheap stock picks to buy for big buybacks, dividends



David Kostin, the chief US equity strategist at Goldman Sachs, says he's brought together a group of S&P 500 stocks that return double the average company in the broader index. Kostin adds that the stocks have underperformed the index for the last few years despite their superior returns. The performance of those stocks has steadily gotten worse as investors got more optimistic about economic growth.Visit Business Insider's homepage for more stories.It's a rare combination, but Goldman Sachs says you can get better-than-average returns from a few stocks while also buying them at better-than-average prices.To get more news about WikiFX, you can visit wikifx news official website.
　　David Kostin, chief US equity strategist at Goldman Sachs, says he's identified a group of stocks that more than double the cash return of the median S&P 500 stock, which is currently 4.4%. Most of them pay hefty dividends, and some augment that by repurchasing large amounts of their stock every year.And yet Kostin says those stocks have been collectively underperforming the S&P 500, as shown in the chart below. It shows the high-return stocks falling farther and farther behind the benchmark index over the last three years, with a few attempted rallies that didn't last long.Put simply, these stocks that offer strong cash distributions can be found at a bargain.
David Kostin of Goldman Sachs says stocks that offer outsize cash returns have underperformed the S&P 500 for years.
　　Goldman Sachs Global Investment Research
　　And most recently, they've gotten even cheaper relative to the market as investors got more optimistic about the economy and resumed their preference for growth over higher-yielding stocks.
　　Listed below are Kostin's top 15 stocks. They're ranked from lowest to highest based on their yield, defined as dividend payouts and stock buybacks as a percentage of their market caps over the past 12 months.
For companies on the brink of junk (I'm sorry, “speculative grade”) status high debt, low productivity and lower profits are a dangerous cocktail. Taken all together it could make debt servicing more challenging for companies in rough shape.For investors it's a cocktail made all the more dangerous by the fact that corporate credit spreads have been so tight, lulling them into a false sense of security as they chase higher yields.
　　“Ultimately, this leads to what he called a Ponzi Market where the only reason investors keep adding to risk is the fear that prices will be higher tomorrow (or in the case of bonds, yields will be lower tomorrow),” Minerd said in Davos.So why are so many companies teetering on the edge of junk status in a relatively healthy economy？ Consider this: The word credit comes from the Latin word for trust, and what the corporate bond market may be telling us is that it can no longer trust in corporate America's ability to invest productively, hurting profit generation. It may be telling us that even in a world of extra low interest rates eventually debt — and what you do with it — matters.