Goldman Sachs has projected that U.S. stocks will deliver lackluster returns over the next decade primarily due to two key factors: extreme market concentration and elevated valuations. The firm forecasts an annualized nominal total return of just 3% for the S&P 500 over the next decade, which would place it in the 7th percentile of 10-year returns since 1930.
The U.S. equity market is currently near its highest level of concentration in 100 years, with recent gains dominated by the Magnificent 7, a small group of mega-cap technology stocks. Goldman Sachs argues that maintaining the exceptional growth rates and profit margins that have driven these market leaders is historically challenging over extended periods, making it unlikely that the concentrated rally can continue at its recent pace.
In addition, the firm’s model predicts a 72% probability that stocks will underperform bonds over the next decade, according to Wealth Professional, a stark contrast to the 13% annualized returns investors have enjoyed over the past decade. After three years of double-digit returns for investors, it’s likely time to re-allocate portfolios.
Founded in 1869, Goldman Sachs is the world’s second-largest investment bank by revenue and is ranked 55th on the Fortune 500 list of the largest U.S. corporations by total revenue. The Wall Street white-glove giant offers financing, advisory services, risk distribution, and hedging for the firm’s institutional and corporate clients. In addition, it produces some of Wall Street’s most coveted research and serves as a bellwether for the financial industry.
We screened the company’s top stocks for dividend-paying value companies that conservative growth and income investors should consider moving to in what could be a volatile 2026, which will include the mid-term elections, which could change the complexion of Congress next year.
Why we recommend Goldman Sachs stocks
Goldman Sachs is the acknowledged leader in the investment landscape on Wall Street and worldwide. The firm’s top-notch research department continues to provide institutional and high-net-worth clients with the best ideas across the investment spectrum. It is likely to continue doing so for years to come.
Abbott Laboratories
This healthcare giant presents an excellent investment opportunity with a dividend yield of 1.87%. Abbott Laboratories Inc. (NYSE: ABT) is engaged in the discovery, development, manufacture, and sale of a broad and diversified line of healthcare products.
The company operates through four segments:
- Established Pharmaceutical Products
- Diagnostic Products
- Nutritional Products
- Medical Devices
The Established Pharmaceutical Products segment is engaged in the international sales of a broad line of branded generic pharmaceutical products.
The Diagnostic Products segment is engaged in the worldwide sales of diagnostic systems and tests for blood banks, hospitals, commercial laboratories, and alternate-care testing sites.
The Nutritional Products segment is involved in the worldwide sales of a broad line of adult and pediatric nutritional products.
The Medical Devices segment includes the worldwide sales of:
- Rhythm management
- Electrophysiology
- Heart failure
- Vascular
- Structural heart
- Neuromodulation
- Diabetes care products
Goldman Sachs has a $157 target price, representing a 17% gain.
Altria
Altria Group Inc. (NYSE: MO) is one of the world’s largest producers and marketers of tobacco, cigarettes, and related products. This tobacco company offers value investors a compelling entry point and a generous dividend yield of 7.20%. Altria manufactures and sells smokable and oral tobacco products in the United States through its subsidiaries.
The company’s dividend payout is based on free cash flow, ranging from about 64% to 80% per quarter. In recent quarters, free cash flow has exceeded dividend payments, providing a solid buffer. Altria generates strong cash flow from its core tobacco business, which provides a stable base, albeit with regulatory risk, and yields are among the highest in the S&P 500, at least for now.
The company primarily sells cigarettes under the Marlboro brand, as well as:
- Cigars and pipe tobacco, principally under the Black & Mild and Middleton brands
- Moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands
- on! Oral nicotine pouches
- e-vapor products under the NJOY ACE brand
It sells its tobacco products primarily to wholesalers, including distributors and large retail organizations, such as chain stores.
Altria used to own over 10% of Anheuser-Busch InBev S.A. (NYSE: BUD), the world’s largest brewer. Last year, the company sold 35 million of its 197 million shares through a global secondary offering. That represents 18% of its holdings but still leaves 8% of the outstanding shares in its back pocket. Altria also announced a $2.4 billion stock repurchase plan partially funded by the sale.
Goldman Sachs’ price target is $73.
AT&T
AT&T Inc. (NYSE: T) is the world’s fourth-largest telecommunications company, measured by revenue. The legacy telecommunications company has been undergoing a lengthy restructuring process, during which it has reduced its dividend to 4.47%. Seventeen analysts have given the stock a Buy rating, indicating comprehensive Wall Street support. AT&T provides a range of telecommunications, media, and technology services worldwide. Its Communications segment offers wireless voice and data communications services.
AT&T sells through its company-owned stores, agents, and third-party retail stores:
- Handsets
- Wireless data cards
- Wireless computing devices
- Carrying cases
- Hands-free devices
AT&T also provides:
- Data
- Voice
- Security
- Cloud solutions
- Outsourcing
- Managed and provided professional services
- Customer premises equipment for multinational corporations, small and mid-sized businesses, and governmental and wholesale customers
Additionally, this segment provides residential customers with broadband fiber and legacy telephony voice communication services.
It markets its communications services and products under:
- AT&T
- Cricket
- AT&T PREPAID
- AT&T Fiber
The company’s Latin America segment provides wireless services in Mexico and video services in Latin America. This segment markets its services and products under the AT&T and Unefon brands.
Goldman Sachs has a price target of $33 for the stock.
Hershey
With the holidays just around the corner, this is an excellent opportunity for growth and income investors, offering a dependable 3.24% dividend yield. Hershey Co. (NYSE: HSY) is a snacks company operating via these segments:
- North America Confectionery
- North America Salty Snacks
- International
The North America Confectionery segment is responsible for its traditional chocolate and non-chocolate confectionery market position in the United States and Canada.
This includes its business in:
- Chocolate and non-chocolate confectionery
- Gum and refreshment products
- Protein bars
- Spreads
- Snack bites and mixes
- Pantry and food service lines
This segment also includes its retail operations.
The North America Salty Snacks segment is responsible for its salty snacking products in the United States. This includes ready-to-eat popcorn, baked and trans-fat-free snacks, pretzels, and other similar snacks.
The company’s portfolio includes chocolate and confectionery brands such as:
- Hershey’s
- Reese’s
- Kisses
- Kit Kat
- Jolly Rancher
- Ice Breakers
- Shaq-a-licious alongside salty snacks
- SkinnyPop
- Dot’s Homestyle Pretzels
The Goldman Sachs target price for the stock is $222, representing a 19% gain for investors.
Valero
This is one of the safest ways for investors to play the energy sector as refining capacity has shrunk, and supply has increased. Valero Energy Corp. (NYSE: VLO) is a multinational manufacturer and marketer of petroleum-based and low-carbon liquid transportation fuels, as well as petrochemical products.
The company owns over 15 petroleum refineries located in the United States, Canada, and the United Kingdom. It sells its products primarily in:
- United States
- Canada
- United Kingdom
- Ireland
- Latin America
Valero operates through three segments. The Refining segment encompasses the operations of its petroleum refineries, the associated activities involved in marketing its refined petroleum products, and the logistics assets that support these operations.
The Renewable Diesel segment encompasses the operations of Diamond Green Diesel (DGD) and its associated activities, including marketing renewable diesel and renewable naphtha.
The Ethanol segment includes the operations of its ethanol plants and the associated activities involved in marketing its ethanol and co-products.
Goldman Sachs has a target price of $197.