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Why Goldman Sachs (GS) is a Great Dividend Stock Right Now
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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. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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
Headquartered in New York, Goldman Sachs (GS - Free Report) is a Finance stock that has seen a price change of 10.84% so far this year. The investment bank is currently shelling out a dividend of $2.75 per share, with a dividend yield of 2.57%. This compares to the Financial - Investment Bank industry's yield of 0.52% and the S&P 500's yield of 1.58%.
In terms of 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 26.83%. 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. Right now, Goldman's payout ratio is 43%, which means it paid out 43% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, GS expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $35.86 per share, which represents a year-over-year growth rate of 56.80%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that GS is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why Goldman Sachs (GS) is a Great Dividend Stock Right Now
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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
Headquartered in New York, Goldman Sachs (GS - Free Report) is a Finance stock that has seen a price change of 10.84% so far this year. The investment bank is currently shelling out a dividend of $2.75 per share, with a dividend yield of 2.57%. This compares to the Financial - Investment Bank industry's yield of 0.52% and the S&P 500's yield of 1.58%.
In terms of 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 26.83%. 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. Right now, Goldman's payout ratio is 43%, which means it paid out 43% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, GS expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $35.86 per share, which represents a year-over-year growth rate of 56.80%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that GS is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).