5 Goldman Sachs Conviction List Dividend Stocks to Buy for 2021

Investing

Published: January 4, 2021 8:37 am

We finally made it: 2021 is here. Hopefully, many of the issues that were difficult in 2020 will start to fade this year as the country returns to a more normal status. With the COVID-19 vaccine being distributed around the country, many feel that by summertime travel, dining and many other normal, everyday pursuits could return. With the stock market finishing 2020 right near all-time highs, the playbook for this year could be far different.

We screened the Goldman Sachs Americas Conviction list looking for companies and sectors that either were somewhat out of favor in 2020 or were affected in normal operations by the extenuating circumstances caused by the pandemic and the actions that were taken as a result.

All these stocks are of course rated Buy, as the Conviction List is the top stock picks at Goldman Sachs. We also screened for companies that pay dependable dividends, because after 2020’s massive gains, especially on the Nasdaq, this year may be one of consolidation and continued rotation. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Eli Lilly

This large-cap pharmaceutical on the Conviction List has solid upside potential and is a great pick for conservative investors. Eli Lilly and Co. (NYSE: LLY) is a global health care company with numerous core products in a number of primary-care pharmaceutical markets. The company generates revenues from its pharmaceutical product and animal health segments.

The product portfolio includes Zyprexa (for schizophrenia and bipolar disorder), Gemzar (pancreatic cancer), Evista (osteoporosis), Cymbalta (depression), Cialis (erectile dysfunction), Strattera (attention deficit hyperactivity disorder), Erbitux (cancer) and Alimta (chemotherapy). Eli Lilly also has a strong presence in the diabetes market.

Recently, Eli Lilly announced better than expected 2021 guidance, raising 2020 ranges on both top and bottom lines. COVID-19-related revenue of $1 billion to $2 billion is a bonus on top of the company’s already strong commercial portfolio. Its $880 million Prevail acquisition fills a hole in the pipeline.

Eli Lilly announced last month that it is increasing its quarterly dividend by 15%. It will pay its first $0.85 per share distribution next March 10 to investors of record as of February. The increase in the dividend will push the yield to a 2.01% yield.

Goldman Sachs has a $209 price target for Eli Lilly stock. That is well above the Wall Street consensus target of $168.65, and the most recent closing price of $168.84 per share.