We recently published a list of 8 Unstoppable Dividend Stocks to Invest in. In this article, we are going to take a look at where The Goldman Sachs Group, Inc. (NYSE:GS) stands against other unstoppable dividend stocks to invest in.
On December 27, the Magnificent Seven tech stocks declined by 3.1%, driven by the rising popularity of China’s DeepSeek, which uses cost-effective technology, tempering expectations for increased AI-related spending. The broader market also dropped 1.5%. While the long-term potential of DeepSeek remains uncertain, the market’s nervous response highlights the fragile state of the two-year-old bull market. Stocks, which recently reached record highs, are now trading at price-to-earnings ratios not seen since the 1990s. According to analysts, for investors seeking stability amid market volatility, dividend stocks may offer an appealing alternative to bonds, providing strong yields without some of the recent challenges facing the fixed-income market.
Dividend stocks underperformed in 2024 as the ongoing AI boom and growing enthusiasm for tech stocks drew investor attention elsewhere. The Dividend Aristocrats index, which tracks the performance of companies with at least 25 consecutive years of dividend growth, trailed the broader market during the year. Despite this, analysts are confident about the long-term prospects of dividend stocks. Their optimism stems from the strong cash reserves held by many US companies, which provide a solid foundation for maintaining or increasing dividend payments. According to the Wells Fargo Investment Institute, large-cap US companies collectively hold over $2.4 trillion in cash, offering ample potential to initiate or boost dividends.
READ ALSO: 12 Best High Dividend Stocks Under $100
Dividend growth stocks often appeal to investors because they signal a company’s long-term commitment and financial strength. Regular dividend payments typically require profitability, reliable returns, and steady cash flow, making them a strong indicator of a company’s quality. Companies that consistently raise their dividends demonstrate their ability to maintain earnings, which often reflects greater resilience during economic or market challenges. Research shows that dividend-paying companies within the broader market have historically been more profitable than those that do not distribute dividends.
In line with this investor preference, many US companies have been increasing their payouts and establishing dividend policies. By September 30, 2024, approximately 80% of companies in the Index were paying dividends, a figure unchanged from a decade ago. Notably, the technology sector now accounts for 24% of these dividend-paying companies, up from 13% ten years prior, according to Franklin Templeton. Other sectors, such as healthcare and industrials, have also seen a rise in the number of companies offering dividends.
Since the beginning of 2025, the broader market has experienced a gain of just 2.88%. In this context, UBS has highlighted high-quality stocks that are less likely to reduce their current dividend payouts compared to peers. The firm predicts a 22.9% overall likelihood of dividend cuts across regions and sectors, with the US emerging as the most secure market, showing only a 6.2% chance of reductions. In addition, most sectors in the US demonstrate relative stability. Japan, however, stands out as the most promising region for dividend growth, with an expected growth rate of 9.9%.
Companies that prioritize increasing their dividends tend to have characteristics that position them for strong future performance. Over time, firms that regularly raise or initiate dividends have outperformed other market sectors, delivering higher annual returns with less volatility.
Our Methodology
For this article, we first used a stock screener to identify stocks that have reported positive returns in 2024 so far. From this selection, we chose dividend stocks with 12-month gains of at least 30%, as of the close of January 27. The stocks were then arranged in ascending order of their 12-month gain. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
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The Goldman Sachs Group, Inc. (NYSE:GS)
12-Month Return as of January 27: 65.8%
The Goldman Sachs Group, Inc. (NYSE:GS) is an American investment banking company that offers a wide range of financial services to its consumers. A major part of the bank’s operations is its asset and wealth management division, which manages trillions of dollars in assets and plays a key role in its revenue. Investors are eager for Goldman to grow this segment, as its steady revenue helps boost market valuations. The firm has been transitioning to a more capital-efficient model by reducing its equity and debt investments. This strategy streamlines growth, improves stability, and increases its reliance on fee-based income. With a 12-month return of nearly 66%, GS is one of the best unstoppable stocks on our list.
In the fourth quarter of 2024, The Goldman Sachs Group, Inc. (NYSE:GS) reported revenue of $13.87 billion, which showed a 23% growth from the same period last year. For FY24, the company’s assets under supervision grew by 12% over the year, reaching a record high of $3.14 trillion. In addition, its book value per common share rose by 7.4%, climbing to $336.77. The company’s cash position also came in strong as it ended the year with $182 billion available in cash and cash equivalents, up from $155 billion a quarter ago.
The Goldman Sachs Group, Inc. (NYSE:GS) has been making regular dividend payments to shareholders since 1999. In FY24, the company returned $3.8 billion to shareholders through dividends. On January 15, it declared a quarterly dividend of $3.00 per share, which was in line with its previous dividend. The stock supports a dividend yield of 1.89%, as of January 27.
The number of hedge funds tracked by Insider Monkey owning stakes in The Goldman Sachs Group, Inc. (NYSE:GS) grew to 72 in Q3 2024, from 68 in the previous quarter. These stakes have a total value of over $5.6 billion. With over 6 million shares, Fisher Asset Management was the company’s leading stakeholder in Q3.
Overall, GS ranks 3rd on our list of unstoppable dividend stocks to invest in. While we acknowledge the potential for GS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.