Synovus Financial Corp.’s (NYSE:SNV) investors are due to receive a payment of US$0.33 per share on 1st of July. This makes the dividend yield 2.7%, which will augment investor returns quite nicely.
See our latest analysis for Synovus Financial
Synovus Financial’s Dividend Is Well Covered By Earnings
If the payments aren’t sustainable, a high yield for a few years won’t matter that much. Based on the last payment, Synovus Financial was earning enough to cover the dividend, but free cash flows weren’t positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.
Over the next year, EPS is forecast to expand by 27.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 39%, which is in the range that makes us comfortable with the sustainability of the dividend.
NYSE:SNV Historic Dividend June 7th 2021
Synovus Financial Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from US$0.28 in 2011 to the most recent annual payment of US$1.32. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven’t experienced any notable falls during this period.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company’s stock based on its dividend history. We are encouraged to see that Synovus Financial has grown earnings per share at 15% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Synovus Financial’s prospects of growing its dividend payments in the future.
In summary, while it’s good to see that the dividend hasn’t been cut, we are a bit cautious about Synovus Financial’s payments, as there could be some issues with sustaining them into the future. While Synovus Financial is earning enough to cover the dividend, we are generally unimpressed with its future prospects. Overall, we don’t think this company has the makings of a good income stock.
It’s important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. 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 1 warning sign for Synovus Financial that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.
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