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Why Goldman Sachs (GS) is a Top Dividend Stock for Your Portfolio
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Goldman Sachs in Focus
Based in New York, Goldman Sachs (GS - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 28.92%. The investment bank is paying out a dividend of $2.75 per share at the moment, with a dividend yield of 2.21% compared to the Financial - Investment Bank industry's yield of 0.82% and the S&P 500's yield of 1.58%.
Looking at dividend growth, the company's current annualized dividend of $11 is up 4.8% from last year. Goldman Sachs has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 24.42%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Goldman's current payout ratio is 35%. This means it paid out 35% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for GS for this fiscal year. The Zacks Consensus Estimate for 2024 is $35.49 per share, representing a year-over-year earnings growth rate of 55.18%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, GS is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Why Goldman Sachs (GS) is a Top Dividend Stock for Your Portfolio
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Goldman Sachs in Focus
Based in New York, Goldman Sachs (GS - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 28.92%. The investment bank is paying out a dividend of $2.75 per share at the moment, with a dividend yield of 2.21% compared to the Financial - Investment Bank industry's yield of 0.82% and the S&P 500's yield of 1.58%.
Looking at dividend growth, the company's current annualized dividend of $11 is up 4.8% from last year. Goldman Sachs has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 24.42%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Goldman's current payout ratio is 35%. This means it paid out 35% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for GS for this fiscal year. The Zacks Consensus Estimate for 2024 is $35.49 per share, representing a year-over-year earnings growth rate of 55.18%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, GS is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).