Steady dividend payers are expected to be the winners in an environment rocked by high uncertainty and slowing economic growth, according to Goldman Sachs. Companies that will perform well during times of elevated uncertainty are those that have secure buyback and dividend programs, rather than those looking to invest in further growth, said David Kostin, Goldman’s chief U.S. equity strategist. Uncertainty will have the largest effect on corporate buybacks and cash M & A, followed by capex, Kostin said. Buybacks and cash M & A tend to be the most volatile and are adjusted most frequently based on the operating environment, he said, adding that capex growth decisions are more slower moving during highly uncertain times. “We expect investors will continue to reward firms returning cash to shareholders relative to those companies investing for growth,” Kostin wrote in a weekend note to clients. “This pattern typically occurs when economic growth is slowing or potentially entering recession and has repeated in recent months.” To reflect expectations of greater macroeconomic uncertainty and weaker earnings growth, Goldman earlier this week reduced its S & P 500 cash spending forecast to $3.8 trillion in 2025, or just 5% growth, compared to its previous forecast of 11% . The firm also forecast just 3% earnings per share growth for this year, signaling limited new cash flow generation to fund spending increases. The firm rebalanced several of its sector-neutral baskets, including its total cash return basket, which has outperformed its basket of stocks with strong capex and R & D. Here are a few of Goldman’s best cash return players: Fashion company Tapestry boasts a strong trailing 12-month buyback yield of 24%. The Coach and Kate Spade parent announced a $2 billion share buyback in November. Shares of Tapestry have outperformed the broader market, rising 6.1% this year after the company exceeded holiday-quarter sales expectations and raised its full-year forecast. Tapestry also has limited manufacturing in China, easing investors’ concerns around potential tariff impacts. Marathon Petroleum also made Goldman’s list. The energy company has a trailing 12-month buyback and dividend yield of 17% and 2%, according to the firm. Its shares have slid 1.7% year to date. Hewlett Packard Enterprise and Applied Materials are two technology giants that Goldman included in its cash screen. Hewlett Packard has been hit especially hard this year, losing more than 23% amid the broader tech sell-off. Elliott took an approximately $1.5 billion position in the company earlier this month.
