In its concerted efforts to increase shareholder value, the board of directors of Synchrony Financial (SYF - Free Report) has announced a plan to hike the quarterly dividend by 94%, effective third-quarter 2018. The company would pay a dividend of 21 cents per share to shareholders of record as of Mar 31, 2018.
This piece of news was well received by investors, driving the shares to inch up 1.5%.
Based on the closing price of $35.44 as of May 18, the annualized dividend of 84 cents yields 1.69%, comparatively better than the industry average of 1.27%.
Synchrony Financial boasts an impressive record of increasing its dividend at a two-year CAGR of 6.9% since 2015.
Additionally, the premier consumer financial service providing company has approved a share buyback program of up to $2.2 billion through Jun 30, 2019. This is likely to boost the company’s bottom line in turn.
This dividend raise is supported by the company’s strong capital structure. Its leverage ratio (debt to equity) of 146% is below the industry average of 219%. The company has also been witnessing a rise in cash flow from operation from the past many years.
Shares of the company have surged 31.70% in the past year, outperforming the industry’s growth of 14.96%. We expect factors like better interest income, inorganic growth and solid retail card sales to boost the shares in the near future.
Stocks to Consider
Synchrony Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Some better-ranked stocks from the finance sector are Virtu Financial, Inc. (VIRT - Free Report) , American Equity Investment Life Holding Company (AEL - Free Report) and TCG BDC, Inc. (CGBD - Free Report) .
Virtu Financial provides market making and liquidity services to financial markets across the globe. The company came up with a positive earnings surprise of 26.13% over the trailing four quarters and a Zacks Rank #1 (Strong Buy).
American Equity Investment Life offers life insurance products and services in the United States, pulling off an average four-quarter beat of 24.38%. The company carries a Zacks Rank #2 (Buy).
TCG BDC, Inc. is a managed and non-diversified closed-end investment company, primarily focused on lending to middle market companies. It managed to deliver a positive four-quarter positive surprise of 9.52%. The stock holds a Zacks Rank of 2.
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