Dividend per share market pricing is ‘too pessimistic’ says Goldman, lists high dividend yield and growth stocks

Goldman Sachs analysts believe that investors should own dividend futures amid market pricing pessimism.

Analysts forecast S&P 500 (SP500) dividend per share of $80 in 2025, which is 5% above the market pricing at $76. They believe S&P 500 dividends will grow by 7% this year and another 7% next year.

“Despite weak EPS growth in 2023, mega-cap tech dividend initiations have supported DPS (dividend per share) growth in 2024,” said David J. Kostin, chief U.S. equity strategist, in a note, and added that S&P 500 (SP500) dividend per share grew 6% year-over-year through the first three quarters.

In addition, he said that Goldman analysts believe market pricing is “too pessimistic.”

The 10-year annualized S&P 500 (SP500) dividend per share growth never went below 2% post-WWII, and now they have a 10-year annualized dividend per share growth forecast of 5%, well above the dividend market pricing of 1% growth.

“Futures contracts ultimately pay out based on the level of realized DPS, with considerable volatility along the way,” Kostin said. “Investors who can tolerate that volatility should be rewarded as futures market pricing converges towards our fundamental forecasts.”

The following is Goldman’s “dividend yield and growth” basket, divided by sectors.

The dividend growth model is based on EPS growth in the same year and in each of the two years prior, analysts explained.

Communication services

• Verizon Communications (VZ) – Payout ratio: 58%; 2024-2026 dividend CAGR: 2%; 2025 DPS over current price: 6%
• Interpublic Group of Companies (IPG) – Payout ratio: 46%; 2024-2026 dividend CAGR: 6%; 2025 DPS over current price: 4%
• Comcast Corp. (CMCSA) – Payout ratio: 28%; 2024-2026 dividend CAGR: 6%; 2025 DPS over current price: 3%
• T-Mobile US Inc. (TMUS) – Payout ratio: 27%; 2024-2026 dividend CAGR: 33%; 2025 DPS over current price: 2%

Consumer discretionary

• Darden Restaurants (DRI) – Payout ratio: 55%; 2024-2026 dividend CAGR: 7%; 2025 DPS over current price: 4%
• LKQ Corp. (LKQ) – Payout ratio: 31%; 2024-2026 dividend CAGR: 8%; 2025 DPS over current price: 3%
• Tapestry Inc. (TPR) – Payout ratio: 31%; 2024-2026 dividend CAGR: 10%; 2025 DPS over current price: 3%
• Yum! Brands Inc. (YUM) – Payout ratio: 44%; 2024-2026 dividend CAGR: 9%; 2025 DPS over current price: 2%
• eBay Inc. (EBAY) – Payout ratio: 21%; 2024-2026 dividend CAGR: 12%; 2025 DPS over current price: 2%

Consumer staples

• Archer-Daniels-Midland (ADM) – Payout ratio: 37%; 2024-2026 dividend CAGR: 8%; 2025 DPS over current price: 4%
• Molson Coors Beverage (TAP) – Payout ratio: 30%; 2024-2026 dividend CAGR: 9%; 2025 DPS over current price: 3%
• Hershey Co. (HSY) – Payout ratio: 59%; 2024-2026 dividend CAGR: 9%; 2025 DPS over current price: 3%

Energy

• Devon Energy Corp. (DVN) – Payout ratio: 36%; 2024-2026 dividend CAGR: 6%; 2025 DPS over current price: 4%
• EOG Resources Inc. (EOG) – Payout ratio: 32%; 2024-2026 dividend CAGR: 10%; 2025 DPS over current price: 3%

Financials

• Franklin Resources Inc. (BEN) – Payout ratio: 47%; 2024-2026 dividend CAGR: 3%; 2025 DPS over current price: 6%
• Regions Financial (RF) – Payout ratio: 46%; 2024-2026 dividend CAGR: 5%; 2025 DPS over current price: 4%
• Citigroup Inc. (C) – Payout ratio: 33%; 2024-2026 dividend CAGR: 5%; 2025 DPS over current price: 4%
• State Street Corp. (STT) – Payout ratio: 33%; 2024-2026 dividend CAGR: 7%; 2025 DPS over current price: 3%
• Wells Fargo & Co. (WFC) – Payout ratio: 29%; 2024-2026 dividend CAGR: 13%; 2025 DPS over current price: 3%
• Blackstone Inc. (BX) – Payout ratio: 62%; 2024-2026 dividend CAGR: 23%; 2025 DPS over current price: 3%
• Bank of York Mellon (BK) – Payout ratio: 30%; 2024-2026 dividend CAGR: 10%; 2025 DPS over current price: 3%

Health care

• Bristol-Myers Squibb (BMY) – Payout ratio: 42%; 2024-2026 dividend CAGR: 5%; 2025 DPS over current price: 5%
• CVS Health Corp. (CVS) – Payout ratio: 37%; 2024-2026 dividend CAGR: 7%; 2025 DPS over current price: 4%
• Viatris Inc. (VTRS) – Payout ratio: 18%; 2024-2026 dividend CAGR: 8%; 2025 DPS over current price: 4%
• AbbVie Inc. (ABBV) – Payout ratio: 52%; 2024-2026 dividend CAGR: 5%; 2025 DPS over current price: 3%
• Merck & Co. Inc. (MRK) – Payout ratio: 33%; 2024-2026 dividend CAGR: 6%; 2025 DPS over current price: 3%
• Cigna Group (CI) – Payout ratio: 18%; 2024-2026 dividend CAGR: 11%; 2025 DPS over current price: 2%

Industrials

• Snap-on Inc. (SNA) – Payout ratio: 37%; 2024-2026 dividend CAGR: 11%; 2025 DPS over current price: 3%
• Cummins Inc. (CMI) – Payout ratio: 34%; 2024-2026 dividend CAGR: 7%; 2025 DPS over current price: 2%
• Fastenal Co. (FAST) – Payout ratio: 72%; 2024-2026 dividend CAGR: 9%; 2025 DPS over current price: 2%
• FedEx Corp. (FDX) – Payout ratio: 26%; 2024-2026 dividend CAGR: 9%; 2025 DPS over current price: 2%

Information technology

• HP Inc. (HPQ) – Payout ratio: 31%; 2024-2026 dividend CAGR: 5%; 2025 DPS over current price: 3%
• Skyworks Solutions (SWKS) – Payout ratio: 44%; 2024-2026 dividend CAGR: 4%; 2025 DPS over current price: 3%
• Cisco Systems Inc. (CSCO) – Payout ratio: 44%; 2024-2026 dividend CAGR: 2%; 2025 DPS over current price: 3%
• International Business Machines (IBM) – Payout ratio: 63%; 2024-2026 dividend CAGR: 1%; 2025 DPS over current price: 3%
• Corning Inc. (GLW) – Payout ratio: 51%; 2024-2026 dividend CAGR: 5%; 2025 DPS over current price: 2%
• Seagate Tech Holdings (STX) – Payout ratio: 37%; 2024-2026 dividend CAGR: 1%; 2025 DPS over current price: 2%
• Microchip Technology (MCHP) – Payout ratio: 67%; 2024-2026 dividend CAGR: 5%; 2025 DPS over current price: 2%
• Juniper Networks (JNPR) – Payout ratio: 47%; 2024-2026 dividend CAGR: 2%; 2025 DPS over current price: 2%
• QUALCOMM Inc. (QCOM) – Payout ratio: 30%; 2024-2026 dividend CAGR: 7%; 2025 DPS over current price: 2%
• TE Connectivity (TEL) – Payout ratio: 31%; 2024-2026 dividend CAGR: 7%; 2025 DPS over current price: 2%
• NXP Semiconductors (NXPI) – Payout ratio: 27%; 2024-2026 dividend CAGR: 5%; 2025 DPS over current price: 2%
• Analog Devices (ADI) – Payout ratio: 49%; 2024-2026 dividend CAGR: 7%; 2025 DPS over current price: 2%
• NetApp Inc. (NTAP) – Payout ratio: 28%; 2024-2026 dividend CAGR: 2%; 2025 DPS over current price: 2%
• Accenture Plc (ACN) – Payout ratio: 46%; 2024-2026 dividend CAGR: 14%; 2025 DPS over current price: 2%
• Cognizant Tech Solutions (CTSH) – Payout ratio: 25%; 2024-2026 dividend CAGR: 5%; 2025 DPS over current price: 2%
• Dell Technologies (DELL) – Payout ratio: 20%; 2024-2026 dividend CAGR: 13%; 2025 DPS over current price: 2%

Materials

• LyondellBasell Industries (LYB) – Payout ratio: 60%; 2024-2026 dividend CAGR: 7%; 2025 DPS over current price: 6%

Real estate

• SBA Communications (SBAC) – Payout ratio: 45%; 2024-2026 dividend CAGR: 14%; 2025 DPS over current price: 2%

Utilities

• WEC Energy Group (WEC) – Payout ratio: 65%; 2024-2026 dividend CAGR: 7%; 2025 DPS over current price: 4%