Yahoo Finance TD SYNNEX's (NYSE:SNX) Upcoming Dividend Will Be Larger Than Last Year's
TD SYNNEX Corporation's (NYSE:SNX) dividend will be increasing from last year's payment of the same period to $0.35 on 27th of January. This makes the dividend yield about the same as the industry average at 1.3%.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that TD SYNNEX's stock price has increased by 34% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.
View our latest analysis for TD SYNNEX
TD SYNNEX's Earnings Easily Cover The Distributions
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Prior to this announcement, TD SYNNEX's dividend was only 18% of earnings, however it was paying out 147% of free cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.
Looking forward, earnings per share is forecast to rise by 86.1% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 9.7%, which is in the range that makes us comfortable with the sustainability of the dividend.
TD SYNNEX's Dividend Has Lacked Consistency
Looking back, TD SYNNEX's dividend hasn't been particularly consistent. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2015, the dividend has gone from $0.50 total annually to $1.40. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.
TD SYNNEX May Find It Hard To Grow The Dividend
With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. However, TD SYNNEX's EPS was effectively flat over the past five years, which could stop the company from paying more every year.
The Dividend Could Prove To Be Unreliable
Overall, we always like to see the dividend being raised, but we don't think TD SYNNEX will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would probably look elsewhere for an income investment.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 3 warning signs for TD SYNNEX you should be aware of, and 1 of them is concerning. Is TD SYNNEX not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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