Goldman Sachs analysts forecast that S&P 500 dividends will grow by 6% year-over-year in 2025, even as the index experienced a 6% selloff from its February high. According to the investment bank, this 6% growth represents a payout ratio of 30% and dividends of about $80 per share.
Stable Dividend Pricing Amid Volatility
Goldman Sachs noted that, unlike overall equity market valuations, dividend pricing has remained remarkably stable despite recent volatility. “Unlike the equity market, dividends did not price in post-election exuberance and have been notably resilient amid market volatility,” the analysts wrote. They argue that while market growth expectations have moderated in line with revised economic forecasts, dividend futures are pricing in a more pessimistic outlook relative to their projections.
Earnings Growth and Dividend Forecasts
The dividend forecast is closely tied to corporate earnings expectations. Goldman Sachs reported that S&P 500 EPS grew by 10% year-over-year in 2024 and now projects EPS growth of 9% for 2025. However, the firm acknowledges both upside and downside risks:
Upside Risk:The potential for excess capital returns from the Financials sector—driven by regulatory reform—could boost dividend growth to 8% in a modest scenario or even 9% in a more optimistic scenario.
Downside Risk:Slowing economic growth poses a threat. Goldman’s economists recently lowered the Q4/Q4 U.S. GDP growth forecast from 2.2% to 1.7%, which in turn reduces the 2025 annual average GDP growth forecast from 2.3% to 2.0%.
For a closer look at historical earnings trends that underpin these projections, investors can explore the Historical Earnings API.
Valuation Context and Future Outlook
Goldman’s projection is based on robust corporate earnings and a stable dividend environment, even as broader market expectations appear more cautious. Despite the recent selloff in equity prices, the resilience of dividends suggests that investors may still find attractive yield opportunities in the S&P 500.
To assess how current valuation multiples relate to these forecasts, the Ratios (TTM) API provides detailed insights into key financial metrics, including payout ratios and earnings multiples.
As uncertainties persist, especially with potential regulatory and economic headwinds, Goldman Sachs’ projections offer a nuanced view of the market. While equity growth expectations have been tempered, the stability in dividend pricing indicates that dividend yield could serve as a compelling anchor for investors navigating a volatile environment.
