Technology

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

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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

Based in Columbus, Synovus Financial (SNV) is in the Finance sector, and so far this year, shares have seen a price change of 12.91%. The holding company for Synovus Bank is paying out a dividend of $0.3 per share at the moment, with a dividend yield of 3.32% compared to the Banks - Southeast industry's yield of 1.73% and the S&P 500's yield of 1.89%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.20 is up 20% from last year. Synovus Financial has increased its dividend 5 times on a year-over-year basis over the last 5 years 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 27%. This means it paid out 27% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for SNV for this fiscal year. The Zacks Consensus Estimate for 2019 is $3.96 per share, which represents a year-over-year growth rate of 8.79%.

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. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.