Goldman Sachs Identifies Top 10% Yielding Dividend Stocks for Defensive Investment

Goldman Sachs thinks that investors should be cautious because the market is uncertain, even though there have been some gains. They suggest that investors consider investing in defensive stocks, such as dividend stocks, which can provide a reliable passive income. Goldman Sachs has identified two dividend stocks that offer yields of up to 10%. One of these stocks is Coterra Energy, an energy firm in Texas that produces crude oil, natural gas, and natural gas liquids. Coterra has had strong profits due to the high prices of oil and natural gas in 2021, despite producing fewer barrels of oil equivalent in 2022. Coterra pays out a dividend of 57 cents per common share, which yields an impressive 9%.

Goldman Sachs also recommends Pioneer Natural Resources, another Texas-based energy company that produces oil and natural gas in the Permian Basin. Pioneer’s unique advantage is that it operates on privately held acreage, which gives it an advantage over companies that operate on public lands that the Biden administration has shown reluctance to approve for hydrocarbon operations. Pioneer is set to release its 1Q23 results soon, but its 4Q22 results showed a bottom-line beat with EPS of $5.91 and revenue of $5.1 billion. The company’s quarterly free cash flow was $1.7 billion, which supported its dividend payment. Pioneer pays a dividend based on a combination of base-plus-variable, and its most recent payment was $5.58 per share, giving a yield of 10%. Goldman Sachs gives Pioneer shares a Buy rating with a target price of $311, suggesting a potential upside of 15%.

Overall, the consensus among analysts is a Moderate Buy for Pioneer Natural Resources, with a potential upside of around 13%. While opinions on the stock are more spread out, many agree that Pioneer’s ability to generate cash and its low-cost assets position it favorably for future growth. Additionally, Pioneer’s private acreage gives it an advantage over competitors who may face greater regulatory challenges operating on public lands. Overall, the potential for price appreciation and a strong dividend yield make Pioneer Natural Resources an attractive investment opportunity in the energy sector.