Back to top

Image: Bigstock

Sanofi (SNY) is a Top Dividend Stock Right Now: Should You Buy?

Read MoreHide Full Article

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

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.

Sanofi in Focus

Based in Paris, Sanofi (SNY - Free Report) is in the Medical sector, and so far this year, shares have seen a price change of 5.39%. Currently paying a dividend of $1.37 per share, the company has a dividend yield of 2.67%. In comparison, the Large Cap Pharmaceuticals industry's yield is 2.58%, while the S&P 500's yield is 1.33%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.37 is up 16.7% from last year. In the past five-year period, Sanofi has increased its dividend 3 times on a year-over-year basis for an average annual increase of 2.18%. 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. Right now, Sanofi's payout ratio is 34%, which means it paid out 34% of its trailing 12-month EPS as dividend.

SNY is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $3.85 per share, with earnings expected to increase 14.93% from the year ago period.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, SNY presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Sanofi (SNY) - free report >>

Published in