Goldman Sachs Says These 12 Consumer Stocks Had Big Shareholder Returns Over the Past Year

Editors' pick: Originally published Monday, Feb. 8.

Investors are fearing a recession, but the commitment by corporate managements to share buybacks is "a bullish signal" in the markets, according to Goldman Sachs.

Roughly 75% of S&P 500 (SPY) companies have reported their fourth-quarter earnings to date. "Companies have generally expressed a continued commitment to buybacks, holding the view that market weakness is a reason to increase, rather than taper, their repurchases," Goldman Sachs analyst David Kostin wrote in a Feb. 5 note to clients.

United Technologies (UTX) , for example, said in its fourth-quarter earnings call that "'the best M&A opportunity we see right now is UTX stock,' and expressed a desire to continue buybacks 'as long as we feel there's a significant discount between the intrinsic value of UTC and the share price,'" Kostin wrote. "We believe buybacks may account for nearly 20% of recent trading volume."

There have been a "flood of new" repurchase authorizations to boost the already ample store of "dry powder" for buybacks in 2016, the note said. S&P 500 buyback authorizations have exceeded $60 billion this year -- putting "early 2016 on pace to be one of the fastest starts on record," it said.

For instance, Gilead Sciences (GILD) authorized $12 billion in buybacks and 3M (MMM) authorized $10 billion in buybacks are just two examples of companies boosting their repurchase activity this year. As well, General Electric (GE) and AIG (AIG) have announced intentions to return cash to investors through a combination of dividends and share repurchases, targeting $26 billion and $25 billion, respectively, according to the Goldman note, while other companies like Apple (AAPL) still have plenty of capacity under exiting buyback programs.

To be sure, "corporate foresight is far from perfect," Kostin wrote, noting that 2007 was the largest year on record for share buybacks, but it was just before the financial crisis.

Goldman's basket of S&P 500 stocks with the largest buybacks and dividends in the trailing four quarters has "outperformed the S&P 500 during February in 19 of the last 21 years." (To date, the basket is lagging the S&P 500 by 145 basis points.) The median trailing 12-month total yield for S&P 500 stocks is 4.9%, while Goldman's basket had a median yield of 10.6%. 

Here are the 12 consumer stocks with the biggest cash returns to shareholders in the past year, according to Goldman. We've paired the list with commentary from Jim Cramer, if the stock is owned by his Action Alerts PLUS Charitable Trust Portfolio.

Note: Buyback and dividend yields are currently based on the four calendar quarters ending September 2015.

 

DPS Chart DPS data by YCharts

1. Dr Pepper Snapple  (DPS)
Industry: Consumer Non-Discretionary/Soft Drinks
12-Month Total Return: 15.3%

Trailing 12-Month Yield: 7%
12-Month Buyback Yield: 4.2%
12-Month Dividend Yield: 2.8%

Dr Pepper Snapple operates as a brand owner, manufacturer, and distributor of non-alcoholic beverages in the United States, Canada, Mexico and the Caribbean. The company operates through three segments: Beverage Concentrates, Packaged Beverages and Latin America Beverages.

 

CVS Chart CVS data by YCharts

2. CVS Health (CVS)
Industry: Consumer Non-Discretionary/Drug Retail
12-Month Total Return: -9.3%

Trailing 12-Month Yield: 7%
12-Month Buyback Yield: 5.4%
12-Month Dividend Yield: 1.6%

CVS Health, together with its subsidiaries, provides integrated pharmacy health care services in the United States. The company operates through Pharmacy Services and Retail Pharmacy segments.

 

CLX Chart CLX data by YCharts

3. Clorox (CLX)
Industry: Consumer Non-Discretionary/Household Products
12-Month Total Return: 20.2%

Trailing 12-Month Yield: 7.5%
12-Month Buyback Yield: 4.3%
12-Month Dividend Yield: 3.1%

Clorox manufactures and markets consumer and professional products worldwide. The company operates through four segments: Cleaning, Household, Lifestyle and International.

 

HOT Chart HOT data by YCharts

4. Starwood Hotels & Resorts (HOT)
Industry: Consumer Goods & Services/Hotels, Resorts & Cruise Lines
12-Month Total Return: -16%

Trailing 12-Month Yield: 8.7%
12-Month Buyback Yield: 6.2%
12-Month Dividend Yield: 2.5%

Starwood Hotels & Resorts Worldwide, together with its subsidiaries, operates as a hotel and leisure company worldwide.

On Nov. 16, 2015, the company agreed to be acquired by Marriott (MAR) (another company on this list) for $12.2 billion. As part of the merger agreement, Starwood said it would be suspending its share buybacks until the transaction was completed. (The company said its regular dividend would continue.) The deal is expected to be completed in mid-2016. 

Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio owns shares of Starwood.

"We have been vocally skeptical about Starwood's impending deal with Marriott, with our existing concerns confirmed after analysts at Wells Fargo downgraded MAR to Hold from Buy on [Feb. 3], taking its price target range down to $46-$67 from $80-$82," Cramer and Action Alerts PLUS Research Director Jack Mohr wrote in their weekly roundup. "Given the structure of the merger (shareholders of HOT receive 0.92 share of MAR plus $2 in cash for each share of HOT), we recognize that HOT shares will continue to be dragged down along with Marriott, and so took advantage of Thursday's outperformance to trim the position. We are downgrading the name to Three given the clouded deal outlook and continued industry pressures and will keep an eye out for any bounce higher in shares."

Exclusive Look Inside:
You see Jim Cramer on TV. Now, see where he invests his money and why Starwood is a core holding of his multi-million dollar portfolio.

Want to be alerted before Jim Cramer buys or sells HOT? Learn more now.

ADM Chart ADM data by YCharts

5. Archer Daniels Midland (ADM)
Industry: Consumer Non-Discretionary/Agricultural Products
12-Month Total Return: -27.3%

Trailing 12-Month Yield: 8.9%
12-Month Buyback Yield: 6.9%
12-Month Dividend Yield: 2.0%

Archer Daniels Midland procures, transports, stores, processes, and merchandises agricultural commodities and products. The company's Oilseeds Processing segment originates, merchandises, crushes, and processes soybeans and soft seeds into vegetable oils and protein meals.

 

CCE Chart CCE data by YCharts

6. Coca-Cola Enterprises (CCE)
Industry: Consumer Non-Discretionary/Soft Drinks
12-Month Total Return: 11.6%

Trailing 12-Month Yield: 9.1%
12-Month Buyback Yield: 6.8%
12-Month Dividend Yield: 2.4%

Coca-Cola Enterprises produces, distributes, and markets non-alcoholic beverages in Belgium, continental France, Great Britain, Luxembourg, Monaco, the Netherlands, Norway and Sweden.

 

LOW Chart LOW data by YCharts

7. Lowe's (LOW)
Industry: Consumer Goods & Services/Home Improvement Retail
12-Month Total Return: -10.4%

Trailing 12-Month Yield: 9.3%
12-Month Buyback Yield: 7.6%
12-Month Dividend Yield: 1.7%

Lowe's is a home improvement retailer. The company offers products for maintenance, repair, remodeling and home decorating.

DRI Chart DRI data by YCharts

8. Darden Restaurants (DRI)
Industry: Consumer Goods & Services/Restaurants
12-Month Total Return: 11.2%

Trailing 12-Month Yield: 12.1%
12-Month Buyback Yield: 7.7%
12-Month Dividend Yield: 4.4%

Darden Restaurants, through its subsidiaries, owns and operates full-service restaurants in the United States and Canada. As of July 8, 2015, it owned and operated approximately 1,500 restaurants under the Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V's and Yard House brand names. The company was founded in 1968 and is headquartered in Orlando, Fla.

 

CBS.A Chart CBS.A data by YCharts

9. CBS (CBS) (CBS.A)
Industry: Consumer Goods & Services/Broadcasting
12-Month Total Return: -20.9%

Trailing 12-Month Yield: 12.2%
12-Month Buyback Yield: 11.1%
12-Month Dividend Yield: 1.1%

CBS is a worldwide mass media company. It operates through four segments: Entertainment, Cable Networks, Publishing and Local Broadcasting.

 

BBBY Chart BBBY data by YCharts

10. Bed Bath & Beyond (BBBY)
Industry: Consumer Goods & Services/Homefurnishing Retail
12-Month Total Return: -44.5%

Trailing 12-Month Yield: 12.2%
12-Month Buyback Yield: 12.2%
12-Month Dividend Yield: 0%

Bed Bath & Beyond, together with its subsidiaries, operates a chain of retail stores. It sells a range of domestics merchandise, including bed linens and related items, bath items and kitchen textiles; and home furnishings, such as kitchen and tabletop items, fine tabletops, basic housewares, general home furnishings, consumables and certain juvenile products. The company also offers health and beauty care items, and giftware and household items, as well as infant and toddler merchandise. Bed Bath & Beyond Inc. operates stores under the names of Bed Bath & Beyond (BBB); Christmas Tree Shops; Christmas Tree Shops and That! (CTS); Harmon or Harmon Face Values (Harmon); buybuy BABY (Baby); and World Market, Cost Plus World Market, and Cost Plus (Cost Plus World Market).

 

MAR Chart MAR data by YCharts

11. Marriott International (MAR)
Industry: Consumer Goods & Services/Hotels, Resorts & Cruise Lines
12-Month Total Return: -20.4%

Trailing 12-Month Yield: 13.2%
12-Month Buyback Yield: 11.9%
12-Month Dividend Yield: 1.2%

Marriott International operates, franchises, and licenses hotels and timeshare properties worldwide. It operates through three segments: North American Full-Service, North American Limited-Service and International.

On Nov. 16, 2015, the company agreed to acquire Starwood Hotels (another company on this list) for $12.2 billion. Marriott had temporarily suspended its share repurchase program in preparation of its Form S-4 with the Securities and Exchange Commission. As of Dec. 22, 2015, Marriott has since resumed share buybacks. The deal is expected to be completed in mid-2016.

Marriott said at the time of the deal announcement that it had expected to return at least $2.25 billion in dividends and share repurchases to shareholders. "Marriott believes it can return at least as much in the first year following the merger," the company said in a press release announcing the merger. 

 

M Chart M data by YCharts

12. Macy's (M)
Industry: Consumer Goods & Services/Department Stores
12-Month Total Return: -10.4%

Trailing 12-Month Yield: 13.5%
12-Month Buyback Yield: 11.3%
12-Month Dividend Yield: 2.3%

Macy's, together with its subsidiaries, operates stores and Internet websites in the United States. Its stores and websites sell a range of merchandise, including apparel and accessories for men, women, and children; cosmetics; home furnishings; and other consumer goods.

More from Stocks

Quick Read: 3 Things for Investors to Know Before Wednesday's Trading Session

Quick Read: 3 Things for Investors to Know Before Wednesday's Trading Session

Replay: Jim Cramer on the Markets, Oil, General Electric, Zillow and Micron

Replay: Jim Cramer on the Markets, Oil, General Electric, Zillow and Micron

Pegasystems Founder Explains Why He Has One of the Hottest Tech Stocks Around

Pegasystems Founder Explains Why He Has One of the Hottest Tech Stocks Around

Micron Shares Soar; Chipmaker Is 'Managing for Profitability' Now, Says Analyst

Micron Shares Soar; Chipmaker Is 'Managing for Profitability' Now, Says Analyst

Dow Slips 178 Points; S&P 500 and Nasdaq Also Decline

Dow Slips 178 Points; S&P 500 and Nasdaq Also Decline