Synchrony Financial's Dividend Analysis
Assessing the Sustainability and Growth of Synchrony Financial's Dividends
Synchrony Financial (NYSE:SYF) recently announced a dividend of $0.25 per share, payable on 2024-02-15, with the ex-dividend date set for 2024-02-02. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Synchrony Financial's dividend performance and assess its sustainability.
Introducing Synchrony Financial
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Synchrony Financial, originally a spinoff of GE Capital's retail financing business, is the largest provider of private-label credit cards in the United States by both outstanding receivables and purchasing volume. Synchrony partners with other firms to market its credit products in their physical stores as well as on their websites and mobile applications. Synchrony operates through three segments: retail card (private-label and co-branded general-purpose credit cards), payment solutions (promotional financing for large ticket purchases), and CareCredit (financing for elective healthcare procedures).
Synchrony Financial's Dividend Track Record
Synchrony Financial has maintained a consistent dividend payment record since 2016, distributing dividends on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Dividend Yield and Growth Analysis
As of today, Synchrony Financial currently has a 12-month trailing dividend yield of 2.41% and a 12-month forward dividend yield of 2.46%, indicating an expectation of increased dividend payments over the next 12 months. Over the past three years, Synchrony Financial's annual dividend growth rate was 1.50%, which increased to 8.90% per year over a five-year horizon. Based on Synchrony Financial's dividend yield and five-year growth rate, the 5-year yield on cost for Synchrony Financial stock as of today is approximately 3.69%.
Evaluating Dividend Sustainability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Synchrony Financial's dividend payout ratio is 0.19.
Synchrony Financial's profitability rank is 6 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported positive net income for each of the past decade, further solidifying its high profitability.
Future Growth Prospects
To ensure the sustainability of dividends, a company must have robust growth metrics. Synchrony Financial's growth rank of 6 out of 10 suggests a fair growth outlook. Its revenue model is strong, as indicated by the revenue per share and the 3-year revenue growth rate, with a 6.90% average annual increase, outperforming approximately 58.2% of global competitors.
The 3-year EPS growth rate demonstrates Synchrony Financial's ability to grow its earnings by about 3.40% per year on average, outperforming approximately 43.69% of global competitors. Additionally, the company's 5-year EBITDA growth rate of 18.00% outperforms approximately 70.03% of global competitors.
Concluding Insights
In conclusion, Synchrony Financial's dividend payments, consistent dividend growth, modest payout ratio, and fair profitability provide a compelling case for its dividend sustainability. Coupled with positive growth metrics, the company appears well-positioned to continue rewarding shareholders with dividends. Investors considering Synchrony Financial for its dividend prospects should also take note of the company's solid financial health and potential for future growth. Will Synchrony Financial be the next addition to your dividend portfolio?
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
