Whether it’s through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you’re an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Synovus Financial (SNV) is headquartered in Columbus, and is in the Finance sector. The stock has seen a price change of -4.24% since the start of the year. The holding company for Synovus Bank is currently shelling out a dividend of $0.39 per share, with a dividend yield of 3.18%. This compares to the Banks – Southeast industry’s yield of 2.41% and the S&P 500’s yield of 1.53%.
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In terms of dividend growth, the company’s current annualized dividend of $1.56 is up 2.6% from last year. In the past five-year period, Synovus Financial has increased its dividend 3 times on a year-over-year basis for an average annual increase of 4.37%. Any future dividend growth will depend on both earnings growth and the company’s payout ratio; a payout ratio is the proportion of a firm’s annual earnings per share that it pays out as a dividend. Synovus’s current payout ratio is 32%, meaning it paid out 32% of its trailing 12-month EPS as dividend.
SNV is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $5.07 per share, representing a year-over-year earnings growth rate of 14.45%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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. That said, they can take comfort from the fact that SNV is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).