Only Four Days Left To Cash In On Goldman Sachs Group's (NYSE:GS) Dividend
The Goldman Sachs Group, Inc. (NYSE:GS) stock is about to trade ex-dividend in 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Goldman Sachs Group's shares on or after the 28th of February will not receive the dividend, which will be paid on the 28th of March.
The company's next dividend payment will be US$2.75 per share. Last year, in total, the company distributed US$11.00 to shareholders. Based on the last year's worth of payments, Goldman Sachs Group has a trailing yield of 2.8% on the current stock price of US$390.47. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Goldman Sachs Group can afford its dividend, and if the dividend could grow.
View our latest analysis for Goldman Sachs Group
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Goldman Sachs Group paid out a comfortable 45% of its profit last year.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. So we're not too excited that Goldman Sachs Group's earnings are down 2.7% a year over the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Goldman Sachs Group has lifted its dividend by approximately 19% a year on average.
Final Takeaway
From a dividend perspective, should investors buy or avoid Goldman Sachs Group? Goldman Sachs Group's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. It doesn't appear an outstanding opportunity, but could be worth a closer look.
With that being said, if dividends aren't your biggest concern with Goldman Sachs Group, you should know about the other risks facing this business. Every company has risks, and we've spotted 2 warning signs for Goldman Sachs Group you should know about.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
