Goldman says buy dividend stock among dive yields

In a context of falling interest rates, Goldman Sachs advises its clients to buy high dividends, which are trading at their lowest level in almost 40 years compared to low-yielding stocks.

"With a Treasury yield of only 1.5% over 10 years and a likely reduction of the Fed twice this year, investors should look for opportunities in dividend stocks," said Friday the chief US equity strategist. Goldman, David Kostin.

Investors have recently invested in safe haven Treasury bonds, pushing bond yields to their all-time low last week as a result of stock liquidation. If the market remains fragile in the face of the slowdown in the global economy and the intensification of the trade war, investors could turn to equities offering a more stable dividend income, according to Goldman.

The market takes into account a dividend distribution level "too pessimistic", swap market prices involving only 0.7% growth over the next decade, stressed Kostin. In addition, the valuation gap between high and low dividend yielding stocks is close to the biggest difference it has been in the past 40 years, said the strategist.

However, the reality is that US companies are steadily increasing their dividends as the S & P 500's dividends rise by 9% in the first and second quarters of this year, he said. Goldman predicted that the annualized dividend growth of the S & P 500 would be 3.5% over the next decade.

Goldman selected high-growth stocks and high dividends based on their dividend estimates and distribution ratios. The average share of its basket has a dividend yield of 3.8% versus 2.1% for the typical S & P 500 stock.

AT & T, Kohl and the Seagate Technology data storage company all have a dividend yield of around 6% and are on Goldman's list of approximately 50 stocks. Food processor Archer-Daniels Midland, Citizens Financials and Simon Property Group are also major dividend producers.