The simple question how much money does Goldman Sachs make can tell us a lot about the US economy. To explain, Goldman Sachs (NYSE: GS) has its finger on the pulse of America’s economy.
For example, Goldman Sachs operates on both Wall Street and Main Street. Thus, Goldman Sachs’ (GS) performance can give us a good picture of the financial health of both corporate America and Middle America.
Tellingly, Goldman Sachs is doing well right now. For example, Goldman Sachs made a Gross profit of $8.532 billion during 4th Quarter 2018. Additionally, that gross profit equals Goldman Sachs’ 4th Quarter 2018 revenues of $8.532 billion. Therefore, Goldman Sachs delivered a gross margin of 100% in 4th Quarter 2018.
How much money does Goldman Sachs (NYSE: GS) Make? – A lot
Plus Goldman Sachs records an operating income of $3.382 billion, and a net income of $3.538 billion for 4th Quarter 2018.
Moreover, Goldman Sachs (NYSE: GS) reports an operating cash flow of $18.101 billion, and a free cash flow of $17.291 billion for 4th Quarter 2018. Hence, Goldman Sachs is generating a lot of cash from its business.
Impressively, Goldman Sachs had $130.547 billion in cash and equivalents on December 31, 2018. Thus Goldman Sachs is generating vast amounts of cash from its business and keep that cash.
In addition, Goldman Sachs reported $79.315 billion in receivables on 31 December 2018. To clarify, receivables are money that borrowers and others have to pay Goldman Sachs. Hence, Sachs can borrow against those receivables and make more money.
Is Goldman Sachs (NYSE: GS) a Good Dividend stock?
Yes, Goldman Sachs is a good dividend stock because of all the cash it generates. For example, GS will pay an 80¢ dividend on 28 March 2018.
More importantly, that dividend is up from 75¢ on March 1, 2018. Plus, Dividend.com credits Goldman Sachs with seven years of growing dividends.
In detail, Goldman Sachs investors received a 1.64% dividend yield, an annualized payout of $3.20 and a payout ratio of 13% on 1 March 2019. Hence, I conclude Goldman Sachs (GS) was worth the $195.25 share price it achieved on March 5, 2019.
In fact, I consider Goldman Sachs a great dividend stock because of all the money it is making. Therefore, Goldman Sachs (NYSE: GS) is a value investment you should consider for your portfolio.
Is America a Good Investment at Goldman Sachs?
When I ask how much money does Goldman Sachs make, I am also asking is America a good investment?
Judging by Goldman Sachs, America is a superb investment. However, Goldman Sachs’ success does not mean all Americans are doing well.
For example, 52% of the real income growth in the United States between 2013 and 2015 went to the top 1%, UC Berkeley economist Emmanuel Saez estimates. Moreover, Saez claims just 3.9% of America’s real income growth went to the bottom 99% of the population.
Obviously such income inequality is good for Goldman Sachs. To explain, the 1% are likely to be Goldman Sachs’ customers. Moreover, the 1%’s wealth is growing, Saez estimates top 1% US incomes grew by 7.7% between 2014 and 2015.
How Goldman Sachs cashes in on Income Inequality
Hence, Goldman Sachs’ customers have more money and are making money. Therefore, Goldman Sachs is cashing in on income inequality.
Under these circumstances, holding Goldman Sachs stock is a bet that the US government will do little or nothing to fight income inequality. Given Uncle Sam’s track record over the past 50 years that is a very safe bet.
For example, just one component of the 2017 Republican tax cuts, the tax on pass-through entities could offer millionaires $17 billion in tax savings, Voxclaims. In detail, pass-through entities are corporate structures that people organize to avoid taxes. Examples of pass-through entities include; S-Corporations, LLCs, Sole Proprietorships, and various partnerships.
Given this reality, Goldman Sachs could be a great moneymaker for those who can stomach profiting from income inequality. Goldman Sachs can make more money because political leaders rig America’s current economy in favor of the rich. Thus investing in companies that profit from the rich is a good idea.
Goldman Sachs builds for the future with Apple’s Help
Importantly, Goldman Sachs’ Marcus consumer banking division and Apple (NASDAQ: AAPL) are working “to put a bank branch on your smartphone,” Business Insider notes.
Specifically, Goldman Sachs and Apple are offering a MasterCard (NYSE: MA) credit card targeted at Apple fans. The Apple-branded credit card works with Apple Pay and offers 2% cash back on most transactions.
Interestingly, the Apple-branded card is Goldman Sachs’ first foray into the lucrative consumer credit card business. Not surprisingly, the Apple-branded MasterCard targets high-net worth individuals.
How Marcus and Apple Pay can Help Goldman Sachs Grow
For example, it works with Apple Pay but does not offer rewards points. Instead, the MasterCard gives Goldman Sachs’ artificial-intelligence powered banking solution; Marcus Bank, access to Apple Pay. Notably, the MasterCard will integrate with Apple Pay in unspecified ways.
Interestingly, Marcus offers a wide variety of consumer finance products including no-fee personal loans, debt consolidation loans, and high-yield online savings accounts. For instance, Marcus could use Apple Pay to identify affluent Apple users and tailor and market products to them.
Examples of such products could include brokerage services, cryptocurrency investment, and retirement investments. Moreover, Goldman Sachs could offer loans directly to consumers via Apple Pay with Marcus.
Goldman Sachs (NYSE: GS) Taps Cryptocurrency
Digital wallets are just one of several innovative financial products, Goldman Sachs is exploring.
Notably, Goldman Sachs backs the cryptocurrency finance firm Circle which owns the Poloniex crypto asset exchange. Circle claims to have traded $24 billion worth of cryptocurrency at its Hong Kong over-the-counter trading desk in 2018.
Additionally Circle claims to have eight million customers in over 175 countries. Plus Circle claims to have facilitated 200 million crytpocurrency transactions worth roughly $75 billion in 2018.
Goldman Sachs invests in Crypto Exchanges and Stablecoins
Prophetically, Circle offers Poloniex cryptocurrency trading apps for Apple iOS and Android. Importantly, those apps are now available in 13 languages. Moreover, lending and margin-trading features are being added to Poloniex. Beyond, apps Circle and Coinbase are collaborating in the CENTRE Consortium.
CENTRE is a decentralized network of cryptocurrency solutions and exchanges, Circle and Coin Base are building. To clarify, the idea behind CENTRE is to create a worldwide trading market for cryptocurrencies with standard features. Thus, Goldman Sachs, Coinbase, and Circle can make more from the growing trading volume.
Plus CENTRE is behind the popular US dollar-pegged USD Coin (USDC) stablecoin. In detail, each USD Coin contains a smart contract that pays $1 when some spends a USDC token. Thus, USD Coin and CENTRE put Goldman Sachs and Circle at the cutting-edge of crypto-market growth.
Notably, I think stablecoins will be among the most popular and fastest growing segments of the crypto markets. For instance, I believe there will be a huge demand for stablecoins in nations like Argentina and Russia that lack strong fiat currencies.
In particular, affluent Argentines and Russians could use stablecoins to protect their assets from inflation. Under those circumstances, many of them will turn to investment banks like Goldman Sachs to hold their crypto.
Goldman Sachs’ backed Circle Doubles Trading Volume
Therefore, Goldman Sachs is in a great position to cash in on cryptocurrency and integrate crypto-assets trading with Marcus and Apple Pay.
Hence, Goldman Sachs could become a major player in crypto-assets. In particular, Circle claims its recurring trading volume doubled between September and December 2018.
Finally, Circle is offering more sophisticated classes of crypto assets such as the Stablecoins. For instance, the popular US Dollar Coin (USDC) stablecoin now trades on Poloniex.
Consequently, Goldman Sachs is in a good position to grow with the global economy because of its commitment to technology. Hence, I think Goldman Sachs is a value investment and will remain a good value investment for many years to come.