Economy Why Dividend Hunters Love Synchrony Financial (NYSE: SYF)

Why Dividend Hunters Love Synchrony Financial (NYSE: SYF)

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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Today we will take a closer look at Synchrony Financial (NYSE: SYF) from the perspective of a dividend investor. Owning a strong company and reinvesting dividends is generally seen as an attractive way to increase your wealth. On the other hand, investors are known to buy a stock based on their returns and lose money if the company’s dividend does not meet expectations. “Data-reactid =” 27 “> Today we’ll take a closer look at Synchrony Financial (NYSE: SYF) from a dividend investor’s perspective. Having strong business and reinvesting dividends is generally considered an attractive way of increasing your wealth On the other hand, it is known that investors buy a stock based on dividends and then lose money if the company’s dividend does not meet expectations.

With 2.6% yield and a four-year payment history, investors are likely to believe Synchrony Financial to be a reliable dividend stock. A 2.6% return is not inspiring, but the longer payment history has a certain appeal. The company also bought back shares during the year, which is approximately 18% of the company’s market capitalization at the time. Some simple analyzes can reduce the risk of keeping Synchrony Financial for its dividend, and we’ll focus on the key ones below.

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " In this interactive chart you will find our latest analysis on Synchrony Financial! “data-reactid =” 29 “> In this interactive chart you will find our latest analysis on Synchrony Financial!

NYSE: SYF Historical Dividend Yield, February 21, 2020

NYSE: SYF Historical Dividend Yield, February 21, 2020

payouts

Companies (usually) pay dividends on their earnings. If a company pays more than it earns, the dividend may need to be cut. So we have to get an idea of ​​whether a company’s dividend is sustainable in relation to its net profit after tax. Synchrony Financial has paid 15% of its earnings as a dividend for the past twelve months. We like this low payout ratio because it implies that the dividend is well covered and offers ample opportunity to reinvest.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "We update our data on Synchrony Financial every 24 hours, see above you can always get it Here is our latest analysis of financial health.“data-reactid =” 44 “> We update our Synchrony Financial data every 24 hours so you always get our latest financial health analysis.

dividend volatility

Before we buy a stock for its earnings, we want to check whether dividends have been stable in the past and whether the company has been proven to hold its dividend. If we look at the data, we can see that Synchrony Financial has been paying a dividend for four years. The dividend hasn’t fluctuated much, but with a relatively short payment history, we can’t be sure if this is sustainable over a full market cycle. In the past four years, the first annual payment in 2016 was $ 0.52 compared to $ 0.88 in the previous year. This corresponds to an average annual growth rate (CAGR) of approximately 14% per year over this period.

The dividend grew fairly quickly, which may be enough to interest us, although the dividend history is relatively short. Further research may be warranted.

Dividend growth potential

Dividend payments have been constant over the past few years, but we should always check to see if earnings per share (EPS) grow as this helps maintain dividend purchasing power. It’s good to see that Synchrony Financial has increased earnings per share by 15% a year over the past five years. Earnings per share are growing solidly and the payout ratio is low. We believe this is an ideal combination in a dividend share.

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Conclusion

When we look at a dividend stock, we have to judge whether the dividend will increase, whether the company can hold it in a variety of economic circumstances, and whether the dividend distribution is sustainable. We are pleased that Synchrony Financial has a low payout ratio as it suggests profits will be reinvested in the business. We were also happy that earnings increased, although the dividend history is not as long as we would like. Synchrony Financial has a number of positive features, but lags behind our ideal dividend company. However, it can be worth a look to find the right price.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Companies with increasing profits are usually the best dividend stocks long-term view. See what the 12 analysts we're tracking forecast for Synchrony Financial free with the public Analyst estimates for the company, “data-reactid =” 56 “> Companies with rising earnings tend to be the best dividend stocks in the long run. See what the 12 analysts we track are forecasting for Synchrony Financial free with public analyst estimates for the company.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "We also put together a List of global stocks with a market cap of over $ 1 billion and a return of more than 3%. “data-reactid =” 57 “> We have also compiled a list of global stocks with a market capitalization of over USD 1 billion and a return of more than 3%.

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "If you find an error that warrants a correction, please contact the publisher at [email protected], This article from Simply Wall St is general in nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Simply Wall St has no position in the stocks mentioned.

We would like to provide you with a long-term focused research analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or quality materials. Thank you for reading.“data-reactid =” 58 “>If you find an error that warrants a correction, please contact the publisher at [email protected] This article from Simply Wall St is general in nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Simply Wall St has no position in the stocks mentioned.

We would like to provide you with a long-term focused research analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or quality materials. Thank you for reading.

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