GS 504.88 (+2.57%)
US38141G1040Capital MarketsCapital Markets

Last update on 2024-06-25

Goldman Sachs Group (GS) - Dividend Analysis (Final Score: 7/8)

Discover a comprehensive dividend analysis of Goldman Sachs Group (GS), scoring 7 out of 8, assessing dividend performance and stability over 20 years.

Knowledge hint:
The dividend analysis assesses the performance and stability of Goldman Sachs Group (GS) dividend policy using a 8-criteria scoring system.
Learn more...

Short Analysis - Dividend Score: 7

We're running Goldman Sachs Group (GS) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Criteria
Dividend Yield Higher than the Industry Average?
1
Average annual Growth Rate higher than 5% in the last 20 years?
1
Average annual Payout Ratio lower than 65% in the last 20 years?
1
Dividends Well Covered by Earnings?
1
Dividends Well Covered by Cash Flow?
1
Stable Dividends Since the Company Began Paying Dividends?
1
Dividends Paid for Over 25 Years?
0
Reliable Stock Repurchases Over the Past 20 Years?
1

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Dividend yield is a key metric for assessing the income-generating potential of an investment in a stock. It is the annual dividend payment divided by the stock price, expressed as a percentage. A higher dividend yield can signify a strong return on investment but can also be a sign of a declining stock price or financial distress. For Goldman Sachs, its dividend yield compared to the industry average can demonstrate its performance in shareholder returns relative to its peers.

Historical Dividend Yield of Goldman Sachs Group (GS) in comparison to the industry average

Goldman Sachs Group (GS) shows a dividend yield of 2.7218%, which is significantly higher than the industry average of 2.03%. Looking at the historical data, GS's dividend yield has generally been lower than the industry average until recent years. For example, in 2008 during the financial crisis, the industry average spiked to 5.09%, while GS's yield was at 1.659%, showing GS’s comparative resilience. Over the last five years, the yield has progressively increased to 2.7218%, indicating robust dividend growth and a favorable trend for income-focused investors. The current higher dividend yield relative to the industry suggests that Goldman Sachs is providing more substantial returns to its shareholders through dividends compared to its competitors.

Average annual Growth Rate higher than 5% in the last 20 years?

The Dividend Growth Rate measures the annualized percentage growth rate that a company's dividend undergoes over a specific period, typically indicative of its financial health and management's confidence in the company's future performance. A consistent growth rate over 5% usually shows robust financial stability and shareholder value appreciation.

Dividend Growth Rate of Goldman Sachs Group (GS)

The historical Dividend Per Share Growth Rate values for Goldman Sachs Group (GS) over the last 20 years show both positive and negative fluctuations. Observing the values provided: {'values': [23.3333, 35.1351, 0, 30, 7.6923, 0, 8.3571, -7.7126, 0, 26.4286, 15.8192, 9.7561, 13.3333, 1.9608, 11.5385, 8.6207, 31.746, 20.4819, 30, 38.4615, 16.6667]}, and taking the average, which stands at around 15.32%, it's evident that GS exceeds the 5% criterion quite comfortably. However, the intermittent negative and zero growth years highlight some inconsistency and potential vulnerabilities. Overall, while the average growth rate is solid and suggests GS has performed well over an extended period, investors should note periods of volatility and potential instability reflected in the zero and negative growth years. This trend is generally good but should be closely monitored.

Average annual Payout Ratio lower than 65% in the last 20 years?

Explain the criterion for Goldman Sachs Group (GS) and why it is important to consider

Dividends Payout Ratio of Goldman Sachs Group (GS)

An average payout ratio is particularly important for income-focused investors when assessing the sustainability of dividends. A payout ratio below 65% indicates that the company has sufficient earnings to cover dividend payouts and is reinvesting enough in the business for growth. High payout ratios might suggest limited retained earnings for future growth, making the dividend less sustainable in economic downturns.

Dividends Well Covered by Earnings?

The criterion evaluates how effectively a company's earnings can cover its dividend payments, helping to assess the sustainability of those dividends.

Historical coverage of Dividends by Earnings of Goldman Sachs Group (GS)

Evaluating Goldman Sachs Group's earnings relative to its dividends, it is clear that over the past two decades, their Earnings Per Share (EPS) figures are notably higher than their Dividend Per Share (DPS) values. For example, in 2022, the EPS was 31.9824 compared to a DPS of 9, resulting in a dividend cover ratio of approximately 0.281. This indicates that dividends constituted around 28.1% of earnings, signifying a healthy margin for sustainability. These figures suggest that the company has consistently maintained a prudent approach toward managing dividends, paying them well within their earning capabilities. This trend is favorable, showcasing that Goldman Sachs has a cushion to sustain or potentially increase dividends even during periods of lower profitability.

Dividends Well Covered by Cash Flow?

Analyze whether GS's dividends are well covered by its cash flow and explain why cash flow coverage of dividends is critical.

Historical coverage of Dividends by Cashflow of Goldman Sachs Group (GS)

The free cash flow (FCF) coverage of dividends is a significant indicator of a company's ability to sustain its dividend payments. For Goldman Sachs (GS), the FCF coverage of dividends has exhibited high volatility over the past two decades. For instance, in 2009, the FCF coverage jumps to 0.046, showing a positive trend after significant negative figures, notably -0.015 in 2006. Subsequently, extreme variations occur, such as -0.175 in 2014 and an impressive 1.670 in 2021. Most recently, the figure for 2023 is -0.281, suggesting an inability to cover dividends with cash flow. Given that only a few years demonstrated positive coverage, this volatility in cash flow coverage poses significant risks to dividend sustainability, reflecting a potentially unstable or highly cyclical cash generation process. Inconsistent FCF can signal operational challenges forcing reliance on other financing means, which may not be sustainable in the long run.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividend payments are significant for income-seeking investors as they rely on dividends for a steady income stream. Large drops can signal financial instability.

Historical Dividends per Share of Goldman Sachs Group (GS)

Goldman Sachs Group (GS) demonstrates a remarkably consistent trend in its dividend per share over the last 20 years. From 2003 to 2023, the dividends per share have generally trended upwards, starting from $0.74 in 2003 to $10.50 in 2023. However, there was one instance over the 20-year period where dividends dropped by 20%, specifically in the year 2009 during the financial crisis. This dip signifies the potential vulnerabilities of GS in extreme economic conditions. Despite this, the overall trend of rising dividends bodes well for income-seeking investors. Post-2009, the dividends have shown robust growth, reflecting GS's financial recovery and strength.

Dividends Paid for Over 25 Years?

Dividends paid over more than 25 years indicate consistency, stability, and shareholder friendliness, reflecting a company's reliable cash flow generation capabilities.

Historical Dividends per Share of Goldman Sachs Group (GS)

Goldman Sachs Group (GS) has consistently paid dividends since 1999. They started with a dividend of $0.24 per share and have increased it steadily over the years, reaching $10.5 per share in 2023. This 25-year trend demonstrates the company's commitment to returning capital to shareholders and suggests strong underlying financial performance and stability. The progressive increases in dividend payments also portray financial growth, making GS attractive for long-term dividend investors. This trend is very positive, showcasing resilience even through economic downturns, such as the 2008 financial crisis and the COVID-19 pandemic period.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases refer to the consistent buyback of shares by a company over a period, indicating confidence in its own financial health.

Historical Number of Shares of Goldman Sachs Group (GS)

From 2004 to 2008 and then from 2011 to 2023, Goldman Sachs Group (GS) executed reliable stock repurchases. Especially notable are the reduction periods like 2006 and 2007 where buybacks translated into a ~6% decrease each year, reflecting strong cash positions and confidence in intrinsic value. However, in 2009, there was a spike in shares outstanding, likely due to the financial crisis, where outstanding shares increased by about 21% from the prior year. Overall, the average buyback rate of approximately -1.85% aligns with a healthy long-term capital allocation towards shareholder returns, signaling effective buyback strategy over the decades. This trend is good as it shows management's consistent effort in enhancing shareholder value.


Obligatory risk notice

We would like to point out that the contents of this website are for general information purposes only and do not constitute recommendations for the purchase or sale of specific financial instruments, and therefore do not constitute investment advice. In particular, marketstorylabs.com and its creators cannot assess the extent to which information / recommendations made on the pages correspond to your investment objectives, your risk tolerance and your ability to bear losses. Therefore, if you make any investment decisions based on information on the site, you do so solely on your own responsibility and at your own risk. This in turn means that neither marketstorylabs.com nor its creators are liable for any losses incurred as a result of investment decisions based on the information on the marketstorylabs.com website or other media used.