With the third quarter earnings season kicking off last week, investors will be looking for clues from companies about their cash spending outlook in addition to evaluating earnings growth, according to Goldman Sachs.
“We forecast 11% growth in S&P 500 cash spending in 2026, totaling $4 trillion, driven by an improving macro backdrop and continued above-consensus AI capex growth. Our forecasts imply 50% of cash spending will be allocated to capex and R&D, 43% to buybacks and dividends, and 7% to cash M&A,” Goldman analysts led by David Kostin said last Friday.
The analysts noted that major U.S. banks last week “highlighted strong capital markets activity and a healthy consumer, while some regional bank reports raised concerns over credit quality.”
With corporate cash spending in the spotlight, Goldman rebalanced its seven equity baskets, including its dividend yield and growth picks.
Here are the brokerage’s new additions to its dividend yield and growth basket across the eleven sectors, along with their Seeking Alpha Quant ratings:
Communication Services
Consumer Discretionary
- Darden Restaurants (NYSE:DRI); Hold, 2.68.
Consumer Staples
- Hormel Foods (NYSE:HRL); Sell, 1.64.
Energy
Coterra Energy (NYSE:CTRA); Hold, 2.94.
Financials
- Principal Financial (NASDAQ:PFG); Strong Buy; 4.67.
- Blackstone (NYSE:BX); Hold, 3.24.
- State Street (NYSE:STT); Hold, 3.39.
- Fidelity National (NYSE:FNF); Sell, 2.45.
Healthcare
- Pfizer (NYSE:PFE); Hold, 3.44.
- Bristol-Myers Squibb (NYSE:BMY); Hold, 3.30.
Industrials
- Southwest Airlines (NYSE:LUV), Hold, 2.98.
- Fastenal (NASDAQ:FAST), Hold, 2.62.
Information Technology
- Hewlett Packard Enterprise (NYSE:HPE); Hold, 3.33.
- Cognizant Tech Solutions (NASDAQ:CTSH); Hold, 3.26.
- Gen Digital (NASDAQ:GEN); Hold, 3.21.
- CDW (NASDAQ:CDW); Hold, 2.96.
- VeriSign (NASDAQ:VRSN); Hold, 3.22.
Here are some exchange-traded funds of interest that are linked to dividend and growth stocks: (NYSEARCA:VIG), (NYSEARCA:SCHD), (NYSEARCA:VYM), (NYSEARCA:DGRO), (NYSEARCA:SDY), (NASDAQ:DVY), (BATS:NOBL), (BATS:IDV), (NYSEARCA:VUG), (NYSEARCA:IWF), (NYSEARCA:IVW), (NYSEARCA:SCHG), (NYSEARCA:SPYG), (NASDAQ:VONG), (NYSEARCA:MGK), (NASDAQ:IUSG), and (NYSEARCA:VBK).