Reuters
2024.02.12 10:33
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LIVE MARKETS-Which large US company would be the next to declare dividend?

Goldman Sachs predicts Alphabet as the top candidate to initiate a dividend, based on fundamental characteristics. This comes after Facebook-parent Meta Platform declared its first dividend, resulting in a surge in stock market value. Companies with stable cash flows and large buyback programs are more likely to issue dividends, signaling confidence in future earnings. Other stocks on Goldman's list include Amazon, Berkshire Hathaway, and Tesla.

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WHICH LARGE US COMPANY WOULD BE NEXT TO DECLARE DIVIDEND?

Goldman Sachs lifted its S&P 500 (.SPX) dividend per share growth forecast to 6% from 4% for 2024 after Facebook-parent Meta Platform (META.O) recently declared its first dividend.

Meta’s stock surged 20.3%, adding $196 billion in stock market value on Feb. 2 after the payout announcement and robust results, marking the biggest one-day gain by any company in Wall Street history.

For most companies, buybacks are expected to be the primary cash return strategy, given their flexibility, impact on per share metrics, and counterbalancing of stock-based compensation issuance, Goldman strategists, led by David Kostin, said in their latest weekly Kickstart note.

However, for companies with stable cash flows, and especially those with large existing buyback programs, a dividend could signal confidence about future earnings and attract a new group of income-oriented investors, Kostin added.

Companies are more likely to initiate a dividend if they are large, their profit margins are high, they buyback shares, their earnings are stable, and valuations are low, Goldman said.

“Alphabet ranks as the top candidate to initiate a dividend,” Goldman said in the note.

Below is Goldman’s list of top 10 largest stocks that have many of the fundamental characteristics typically associated with dividend payers but currently do not pay one:

Company Sector

Name

  1. Alphabet (GOOGL.O) Communication Services

  2. Amazon.com (AMZN.O) Consumer Discretionary

  3. Berkshire Hathaway Financials

(BRKa.N)

  1. Tesla (TSLA.O) Consumer Discretionary

  2. Salesforce (CRM.N) Information Technology

  3. Adobe (ADBE.O) Information Technology

  4. Advanced Micro Information Technology

Devices (AMD.O)

  1. Netflix (NFLX.O) Communication Services

  2. ServiceNow (NOW.N) Information Technology

  3. Uber (UBER.N) Industrials

(Medha Singh)


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