Stock Analysis

Interested In Synchrony Financial's (NYSE:SYF) Upcoming US$0.22 Dividend? You Have Two Days Left

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NYSE:SYF
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Synchrony Financial (NYSE:SYF) stock is about to trade ex-dividend in 2 days. You can purchase shares before the 4th of February in order to receive the dividend, which the company will pay on the 16th of February.

Synchrony Financial's next dividend payment will be US$0.22 per share, on the back of last year when the company paid a total of US$0.88 to shareholders. Based on the last year's worth of payments, Synchrony Financial has a trailing yield of 2.6% on the current stock price of $33.65. If you buy this business for its dividend, you should have an idea of whether Synchrony Financial's dividend is reliable and sustainable. As a result, readers should always check whether Synchrony Financial has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Synchrony Financial

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Synchrony Financial paid out a comfortable 39% of its profit last year.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
NYSE:SYF Historic Dividend February 1st 2021

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. So we're not too excited that Synchrony Financial's earnings are down 3.0% a year over the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Synchrony Financial has delivered 11% dividend growth per year on average over the past five years.

The Bottom Line

Should investors buy Synchrony Financial for the upcoming dividend? Synchrony Financial's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

With that being said, if dividends aren't your biggest concern with Synchrony Financial, you should know about the other risks facing this business. To help with this, we've discovered 3 warning signs for Synchrony Financial that you should be aware of before investing in their shares.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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What are the risks and opportunities for Synchrony Financial?

Synchrony Financial, together with its subsidiaries, operates as a consumer financial services company in the United States.

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Rewards

  • Trading at 42.4% below our estimate of its fair value

  • Revenue is forecast to grow 16.65% per year

Risks

  • Earnings are forecast to decline by an average of 14.9% per year for the next 3 years

  • Significant insider selling over the past 3 months

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Synchrony Financial

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