Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Synovus Financial in Focus
Headquartered in Columbus, Synovus Financial (SNV) is a Finance stock that has seen a price change of 2.22% so far this year. The holding company for Synovus Bank is paying out a dividend of $0.3 per share at the moment, with a dividend yield of 3.67% compared to the Banks - Southeast industry's yield of 1.78% and the S&P 500's yield of 1.97%.
Looking at dividend growth, the company's current annualized dividend of $1.20 is up 20% from last year. In the past five-year period, Synovus Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 31.88%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Synovus's current payout ratio is 32%. This means it paid out 32% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, SNV expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $4.03 per share, representing a year-over-year earnings growth rate of 10.71%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, SNV is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Synovus Financial Corp. (SNV) : Free Stock Analysis Report
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