Despite making a strong comeback in July and early August, the benchmark S&P 500 Index is still down 15% year to date. A team of Goldman Sachs analysts — led by chief investment officer David Kostin — have just compiled a list of stocks that could be an opportunity for income hunters. These companies offer attractive valuations, high dividend yields, and solid growth prospects. One is Pioneer Natural Resources (PXD), an independent oil and gas exploration and production specialist. Thanks to the strong rallies in oil and gas prices this year, the company is firing on all cylinders. Year to date, PXD shares are up 35% — in stark contrast to the broad market’s double-digit loss. But it’s the sheer size of Pioneer’s shareholder payout that makes it stand out. The company’s board recently declared a cash dividend of $8.57 per share for the third quarter. On an annualized basis, that translates to a yield of 13.3%. However, note that Pioneer has a base-plus-variable dividend policy. Its newly-declared payout includes a $1.10 base quarterly dividend and a $7.47 variable dividend. In other words, the payouts are not carved in stone. But if the market for energy commodities remains strong, the company will likely continue dishing out oversized dividends.
Another is Lumen Technologies (LUMN), a technology and communications company with 450,000 route miles of fiber and customers in more than 60 countries. It offers a wide range of network, edge cloud, security, communication, and collaboration solutions. Unlike Pioneer, Lumen stock hasn’t been a hot commodity — shares are down about 15% yearly. But the company still deserves dividend investors’ attention. Paying quarterly dividends of 25 cents per share, Lumen offers an annual dividend yield of 9.3%. If you wonder whether that level of payout is sustainable, management’s latest outlook might cheer you up.