Goldman Sachs has added 3 dividend stocks to its conviction buy list. The conviction buy list is a listing of stocks the investment bank's research team expects to outperform. Goldman's Sachs' regional Conviction Buy and Sell lists represent investment recommendations focused on either the size of the potential return or the likelihood of the realization of the return. Here is a discussion of the 3 dividend stocks added to the buy list.
The Williams Companies, Inc. (WMB) engages in finding, producing, gathering, processing, and transporting natural gas primarily in the United States. WMB was upgraded from Buy to Conviction Buy at Goldman Sachs on February 28, 2012. The stock is trading at $29.45 with a dividend yield of 3.57%. WMB is ex-Dividend for $0.25875 on March 7, 2012. WMB has potential upside of 10.1% based on a current price of $29.45 and analysts' consensus price target of $31.93. The stock just broke through initial resistance at its 200-day moving average (MA) of $29.03 and subsequent resistance at its 50-day MA of $29.45.
WMB posted adjusted Q4 EPS of $0.36, vs. an adjusted $0.30 a year earlier. The company will benefit from favorable natural gas liquids fundamentals in the future. WMB has budgeted $4.6 billion to $5.4 billion on capex through 2013, which will support its dividend growth. WMB expects to declare dividends of $1.09 per share in 2012, up 41% from last year.
The Blackstone Group, L.P. (BX) provides alternative asset management and financial advisory services worldwide. The company operates in five segments: Private Equity, Real Estate, Hedge Fund Solutions, Credit Businesses, and Financial Advisory. BX was upgraded from Buy to Conviction Buy at Goldman Sachs. BX is trading at $15.70 with a dividend yield of 5.6%. BX is ex-Dividend for $0.22 on March 13, 2012. In the past year, the stock has hit a 52-week low of $10.51 and 52-week high of $19.63. Blackstone Group stock has been showing support around $15.40 and resistance in the $16.16 range. Technical indicators for the stock are Bullish. BX has a potential upside of 21% based on its target price of $19.00 by Goldman Sachs.
Goldman Sachs raises its ratings on Blackstone Group to buy, as it's more bullish on alternative asset managers than its peers in traditional asset classes. Goldman expects robust fundraising activity in real estate and credit. BX has diversified beyond traditional private equity to offer products in those areas, leaving it well positioned to benefit as investors move away from buyouts.
BX recently announced it has agreed to invest $2 billion in Cheniere Energy Partners LP (CQP), in a deal that would help the company finance construction of a gas-liquefaction plant for export markets. Houston-based LNG developer Cheniere will use the investment to build its first export plant in Sabine Pass, Lousiana. Blackstone's investment was made via special units in Cheniere that will convert into common units once the facility begins commercial operation. The deal comes as U.S. producers are making moves to export natural gas as huge increases in domestic production thanks to shale development swamps the market, pushing gas prices way below global levels. Buyers across the world have also lined up to buy the cheap American fuel.
Marriott International, Inc. (MAR) operates, franchises, and licenses hotels and corporate housing properties worldwide. MAR was upgraded from Buy to Conviction Buy at Goldman Sachs on February 24, 2012. In addition, Ned Davis Research upgraded MAR from NEUTRAL to BUY on Feb 27, 2012. MAR is trading at $35.20 with a dividend yield of 1.13%. Following 4th-quarter results, Marriott stated that roughly $1B could be returned to shareholders through share repurchases and dividends in the future.
Fitch affirms MAR financial stability based on the continued solid recovery in lodging demand trends, despite the global macroeconomic risk environment. U.S. RevPAR grew 8.2% in 2011, according to Smith Travel. Fitch expects industry wide U.S. RevPAR to increase 4%-5% in 2012, with Marriott growing in line with, or slightly better than, the industry average. Lodging demand will be supported by low U.S. supply growth of less than 1% in 2012-2013, well below the long-term historical average of 2.1%.
MAR had adjusted Q4 EPS of $0.46, vs. $0.39 from a year ago. Forex hurt along with softer-than-expected performance in New York, and DC. Group bookings appear to still be improving, and MAR raised low end of RevPAR guidance to 5% to 7%.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.