Is Sysco Corporation (NYSE:SYY) A Smart Choice For Dividend Investors?
There is a lot to be liked about Sysco Corporation (NYSE:SYY) as an income stock, over the past 10 years it has returned an average of 3.00% per year. The company currently pays out a dividend yield of 2.19% to shareholders, making it a relatively attractive dividend stock. Does Sysco tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for Sysco
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Does it pay an annual yield higher than 75% of dividend payers?
Does it consistently pay out dividends without missing a payment or significantly cutting payout?
Has the amount of dividend per share grown over the past?
Does earnings amply cover its dividend payments?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Sysco fit our criteria?
The company currently pays out 56.42% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 40.10%, leading to a dividend yield of around 2.29%. However, EPS should increase to $3.28, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. SYY has increased its DPS from $0.88 to $1.44 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. In terms of its peers, Sysco produces a yield of 2.19%, which is on the low-side for Consumer Retailing stocks.
Next Steps:
With this in mind, I definitely rank Sysco as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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 essential aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for SYY’s future growth? Take a look at our free research report of analyst consensus for SYY’s outlook.
Valuation: What is SYY 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 SYY 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 pass 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.
