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Synovus Financial (SNV) is a Top Dividend Stock Right Now: Should You Buy?

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Synovus Financial in Focus

Headquartered in Columbus, Synovus Financial (SNV) is a Finance stock that has seen a price change of 8.06% so far this year. The holding company for Synovus Bank is currently shelling out a dividend of $0.3 per share, with a dividend yield of 3.47%. This compares to the Banks - Southeast industry's yield of 1.77% and the S&P 500's yield of 1.88%.

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 31.97%. 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, with earnings expected to increase 10.71% from the year ago period.

Bottom Line

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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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