Balance sheets “look healthy,” cash flow generation is “attractive,” and dividends and buybacks are set to be resilient, Goldman Sachs says. “Shareholder returns are poised to reach an all-time high,” the bank said in an April 23 note. It expects Europe’s Stoxx 600 to return 500 billion euros ($536 billion) to shareholders via dividends and buybacks. “This implies a 5% yield. The yield differential with the S & P 500 is the widest ever which makes European equities a reasonable alternative to the US,” Goldman wrote. While dividends remain the main source of returns in Europe, buybacks are growing, it noted. “Indeed, the main buyers of equity in recent years have been corporates, via share buybacks. Even corporate insiders, executives and officers are buying more shares in their own firms than they are selling,” the bank said. Dividends have been in the spotlight recently, with a number of tech giants — such as Meta and Alphabet — offering them for the first time. But not all stocks offering buybacks and dividends are equal, Goldman said. “For example, year-to-date, high buyback yield stocks have outperformed low buyback stocks. In contrast, high dividend yield stocks underperformed low dividend yield stocks,” it said. It highlighted its baskets of buyback stocks for a diversified strategy. This basket offers a high single-digit yield with roughly 4% via buybacks plus 4% via dividends — with a sector breakdown as close as possible to the market, said Goldman. These are some stocks in the basket. — CNBC’s Michael Bloom contributed to this report.
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