Better Dividend Stock: JPMorgan Chase vs. Goldman Sachs

The Dow Jones Industrial Average is down 12% from its all-time high at the time of writing, as sweeping changes to U.S. trade policy usher in concerns regarding the economy's strength.

Despite these uncertainties, reliable and high-quality dividend income from a diversified portfolio can be a great option for investors to ride out stock market turbulence. By this measure, JPMorgan Chase (NYSE: JPM) and Goldman Sachs (NYSE: GS) deserve a closer look as two leading Dow Jones components, supported by robust fundamentals and global diversification that remain well-positioned to navigate any market environment.

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Let's discuss which of these financial titans is the better dividend stock to buy now.

Image source: Getty Images.

The case for JPMorgan: A fortress balance sheet

It's often said that it pays to be at the top. In this case, it's not a coincidence that shares of JPMorgan have outperformed the broader market, returning 30% over the past year. JPMorgan benefits from its dominant position as the largest U.S. bank, bolstered by a global financial services footprint.

Its size and scale, with $4.4 trillion in assets -- more than twice Goldman's $1.8 trillion total assets -- could be an advantage during economic turmoil, leveraging a broader deposit base and more diversified revenue streams to support profitability.

That was the message from JPMorgan CEO Jamie Dimon in the first quarter earnings report (for the period ended March 31), who cited "considerable turbulence" facing the U.S. economy amid looming impact of new trade tariffs, but reaffirmed that the bank's underlying business remains strong.

First quarter highlights included record trading revenues driven by market volatility, while resilient consumer spending at the start of the year boosted credit card services and auto lending. For 2025, JPMorgan expects $94.5 billion in net interest income, a 1.5% increase from last year.

The bank's recent 12% dividend increase to $1.40 per share quarterly is excellent news, resulting in a forward yield of 2.4%. With its rock-solid balance sheet, JPMorgan's steady growth and ability to consolidate market share make it a great dividend stock and a compelling portfolio addition.

The case for Goldman Sachs: More upside potential

While JPMorgan is built like a tank, Goldman Sachs stands out with its fighter jet-level sophistication and market agility. Goldman compensates for its limited exposure to consumer banking with a targeted approach in high-margin investment banking activities.

In the first quarter, Goldman set several operating and financial records, including top rankings in M&A, equity offerings, and record financing net revenue. The bank also marked its 29th consecutive quarter of capturing fee-based net inflows in asset and wealth management. Although Goldman's profile is more economically sensitive, this could be an advantage for shareholders if conditions improve, potentially driving stronger earnings growth than JPMorgan.

For bullish investors who believe recession fears are overblown, Goldman Sachs stock may offer more upside as a buy-the-dip opportunity.

Goldman has rewarded shareholders with significant dividend hikes in recent years, more than doubling its quarterly rate to $3.00 per share since 2021 and outpacing JPMorgan's dividend growth over the past five years. With a strong Q1 adjusted EPS jump of 22% from last year, there's a good chance Goldman will announce another dividend increase later this year, potentially in the double-digit range.

Furthermore, Goldman Sachs stock appears relatively undervalued with a forward price to earnings (P/E) ratio of 12 based on 2025 consensus EPS estimates, compared to JPMorgan's multiple near 13. By this measure, there's a case to be made that shares of Goldman are undervalued relative to its banking peer.

JPM Dividend Yield data by YCharts.

Decision time: Goldman is my pick

JPMorgan Chase and Goldman Sachs offer similar dividend yields and face the same macroeconomic headwinds, making it tough to choose the better dividend stock. Still, I give the edge to Goldman, believing its stock offers a better balance of value and dividend growth potential. For investors willing to ride out near-term volatility, Goldman is a great long-term buy-and-hold option in a diversified portfolio.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and JPMorgan Chase. The Motley Fool has a disclosure policy.