Should Synovus Financial Corp. (NYSE:SNV) Be Part Of Your Portfolio?
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, Synovus Financial Corp. (NYSE:SNV) has been paying a dividend to shareholders. Today it yields 2.9%. Let’s dig deeper into whether Synovus Financial should have a place in your portfolio.
View our latest analysis for Synovus Financial
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How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is it the top 25% annual dividend yield payer?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has it increased its dividend per share amount over the past?
Is is able to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
How well does Synovus Financial fit our criteria?
Synovus Financial has a trailing twelve-month payout ratio of 32%, which means that the dividend is covered by earnings. However, going forward, analysts expect SNV’s payout to fall to 28% of its earnings. Assuming a constant share price, this equates to a dividend yield of 3.3%. However, EPS should increase to $3.79, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. SNV investors will be well aware the dividend payments are lower today than they were 10 years ago, although the payments have at least been steady. However, income investors that value stability over growth may still find SNV appealing.
In terms of its peers, Synovus Financial produces a yield of 2.9%, which is on the low-side for Banks stocks.
Next Steps:
Taking into account the dividend metrics, Synovus Financial ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three pertinent aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for SNV’s future growth? Take a look at our free research report of analyst consensus for SNV’s outlook.
Valuation: What is SNV worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether SNV is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
