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
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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.
