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Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Synovus Financial Corp. (NYSE:SNV) is about to go ex-dividend in just four days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Synovus Financial's shares on or after the 14th of June will not receive the dividend, which will be paid on the 3rd of July.
The company's next dividend payment will be US$0.38 per share, on the back of last year when the company paid a total of US$1.52 to shareholders. Based on the last year's worth of payments, Synovus Financial has a trailing yield of 4.8% on the current stock price of $31.5. If you buy this business for its dividend, you should have an idea of whether Synovus Financial's dividend is reliable and sustainable. So we need to investigate whether Synovus Financial can afford its dividend, and if the dividend could grow.
View our latest analysis for Synovus Financial
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Synovus Financial paid out a comfortable 27% 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.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, Synovus Financial's earnings per share have been growing at 19% a year for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Synovus Financial has delivered an average of 18% per year annual increase in its dividend, based on the past 10 years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
The Bottom Line
From a dividend perspective, should investors buy or avoid Synovus Financial? Companies like Synovus Financial that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Synovus Financial looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.