A lot of 'mum and dad' investors like to follow the opinions of the famous names in finance when it comes to making their investment decisions as it's a common perception that the likes of Goldman Sachs employ 'the smartest people in the room'.
One popular business that Goldmans' analysts like right now as a 'buy' according to an April 2019 research note is Sydney Airport Holdings Pty Ltd (ASX: SYD).
Sydney Airport has a lot of things in its favour as a business in that it's a monopoly asset with defensive revenue and profit streams that support a generous dividend payout.
In fact it's guiding for dividends of 39 cents per share over 2019 to put it on a yield of 5.3%.
The airport also has some pricing power that many of the world's most successful long-term investors think is a crucial quality an investment-grade company should possess.
The pricing power comes about for example because car park users or airlines have no choice but to pay the fees if they want to use the airport. While airport users can be charged extortionate prices if they want to enjoy a pre-flight tipple.
The airport also enjoys the tailwind of growing inbound tourism from China in particular as its middle and upper class with disposable income to travel continues to grow at a rapid rate.
As a result of the airport's strengths Goldman Sachs has a $7.80 12-month share price target on the business, although it does acknowledge the risks around buying shares that are often considered "bond proxies" in an environment where the U.S. Fed is lifting rates.
Sydney Airport also carries considerable other risks including its debt levels, valuation and the possibility of an accident hurting its business. As such potential investors should only consider it as a small part of a balanced portfolio.
