Yahoo Finance Goldman Sachs (GS) is a Top Dividend Stock Right Now: Should You Buy?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Goldman Sachs in Focus
Goldman Sachs (GS) is headquartered in New York, and is in the Finance sector. The stock has seen a price change of -6.6% since the start of the year. Currently paying a dividend of $2.5 per share, the company has a dividend yield of 3.12%. In comparison, the Financial - Investment Bank industry's yield is 0.52%, while the S&P 500's yield is 1.76%.
In terms of dividend growth, the company's current annualized dividend of $10 is up 11.1% 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 29.89%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Goldman's current payout ratio is 36%, meaning it paid out 36% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for GS for this fiscal year. The Zacks Consensus Estimate for 2023 is $31.83 per share, representing a year-over-year earnings growth rate of 5.89%.
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.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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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The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report
