Goldman Sachs Group (NYSE:GS) Has Announced That It Will Be Increasing Its Dividend To $3.00

The board of The Goldman Sachs Group, Inc. (NYSE:GS) has announced that it will be paying its dividend of $3.00 on the 27th of September, an increased payment from last year's comparable dividend. This takes the annual payment to 2.4% of the current stock price, which is about average for the industry.

View our latest analysis for Goldman Sachs Group

Goldman Sachs Group's Dividend Is Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Based on the last payment, Goldman Sachs Group was earning enough to cover the dividend, but free cash flows weren't positive. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS is forecast to expand by 27.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 33% by next year, which is in a pretty sustainable range.

Goldman Sachs Group Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $2.00 in 2014 to the most recent total annual payment of $12.00. This means that it has been growing its distributions at 20% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

We Could See Goldman Sachs Group's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Goldman Sachs Group has grown earnings per share at 5.6% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Goldman Sachs Group's prospects of growing its dividend payments in the future.

Our Thoughts On Goldman Sachs Group's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Goldman Sachs Group's payments are rock solid. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for Goldman Sachs Group that you should be aware of before investing. Is Goldman Sachs Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.