Protect Your Portfolio in Volatile Markets with These Buy-Rated Dividend Stocks, According to Goldman

Cushion your portfolio in rocky times with these buy-rated dividend payers, Goldman says

Defensive Investing Strategies Amid Market Volatility: Insights from Goldman Sachs

As we navigate a market characterized by shaky tariff policies and increasing uncertainty, investors must consider a more defensive approach to safeguarding their portfolios. Here at Extreme Investor Network, we believe in empowering our readers with insights that not only highlight current trends but also provide actionable investment strategies that can lead to long-term success. In this blog post, we delve into a recent report from Goldman Sachs that outlines several potential investment candidates designed to offer stability and income amidst the tumultuous market backdrop.

The Current Market Landscape

In recent weeks, we’ve seen the three major U.S. stock indices fluctuate, with the S&P 500 down nearly 4% and the Nasdaq Composite trailing by about 6%. As policy uncertainty continues to weigh heavily on market sentiment, the call for lower volatility investments is becoming louder. Investors are increasingly turning to dividend-paying stocks to not only generate income but also serve as a buffer against potential losses during market downturns.

Goldman Sachs analyst Deep Mehta noted that this flight to safety is underscored by the significant outperformance of lower volatility stocks. In response, his team compiled a list of so-called “buy-rated” stocks that not only offer competitive dividend yields but also exhibit strong growth potential.

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Key Criteria for Stock Selection

Goldman’s selection methodology emphasizes dividend stocks with an estimated yield of at least 2.5% for 2025, coupled with robust growth metrics. Specifically, they looked for companies with:

  • A compound annual growth rate (CAGR) of dividends per share of at least 5% projected from 2024 through 2026.
  • A dividend coverage ratio of at least 1x EPS (for sectors such as financials, real estate, and utilities) or free cash flow for all other industries in 2025 and 2026.

The dividend coverage ratio is especially important as it reflects the ability of a company to sustain its dividend payments, ensuring a more stable income for investors.

Strong Candidates for Defensive Investing

Here are some notable stocks from Goldman Sachs’ comprehensive evaluation, aligning with the defensive investment strategy that we at Extreme Investor Network advocate:

1. Zions Bancorporation (ZION)

  • Current Dividend Yield: 3.4%
  • Performance: Shares are down nearly 7% in 2025, but consensus price targets suggest a potential 22% upside.
  • Earnings Outlook: Zions reported a Q4 earnings per share (EPS) of $1.34, beating expectations, and boosted its net interest income forecasts. According to analyst Peter Winter from D.A. Davidson, ZION’s net interest income is projected to moderately increase, which bodes well for its dividend sustainability and growth.
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2. PepsiCo (PEP)

  • Current Dividend Yield: 3.7%
  • Performance: Despite a 4% decline in share value in 2025, PepsiCo continues to show resilience with a 5% annualized dividend increase, marking the 53rd consecutive year of dividend growth.
  • Market Position: While there have been slight adjustments to expectations regarding first-quarter organic sales, analysts still see more than 11% upside potential, suggesting that this snacking giant remains a stable choice for income-oriented investors.

3. NextEra Energy (NEE)

  • Current Dividend Yield: 3.2%
  • Performance: Shares are down over 2% in 2025, yet the company recently declared a quarterly dividend reflecting a nearly 10% annual increase.
  • Sector Insights: NEE stands out as a powerhouse in renewable energy, balancing gas, and nuclear energy sources. Analyst Anthony Crowdell notes that while renewables are the future, gas and nuclear generation remain essential for reliability, giving NEE a strategic edge in the evolving energy market.
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Other Noteworthy Stocks

Goldman Sachs also highlighted other potential investments, including Citigroup, SLB, and Brixmor Property Group. All of these stocks boast favorable dividend yields and growth prospects, making them suitable candidates for defensive investors amidst current market uncertainties.

Conclusion

In times of market upheaval, adopting a defensive investment strategy is crucial. The stocks highlighted above not only provide a shield against potential losses but also offer opportunities for income generation through dividends. At Extreme Investor Network, we encourage our readers to remain vigilant and consider these options as they build and diversify their portfolios.

Staying informed and strategic in your investment choices can pay off, especially when the market is unpredictable. Remember, the key to successful investing is not just about chasing high returns but also about fostering sustainability and growth in all market conditions. Happy investing!