Yahoo Finance SunTrust Banks Inc (NYSE:STI): What You Have To Know Before Buying For The Upcoming Dividend
If you are interested in cashing in on SunTrust Banks Inc’s (NYSE:STI) upcoming dividend of US$0.50 per share, you only have 2 days left to buy the shares before its ex-dividend date, 30 August 2018, in time for dividends payable on the 17 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine SunTrust Banks’s latest financial data to analyse its dividend characteristics.
Check out our latest analysis for SunTrust Banks
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is its annual yield among the top 25% of dividend-paying companies?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share amount increased over the past?
Is is able to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
How does SunTrust Banks fare?
The current trailing twelve-month payout ratio for the stock is 29.8%, which means that the dividend is covered by earnings. Going forward, analysts expect STI’s payout to increase to 36.9% of its earnings, which leads to a dividend yield of around 2.8%. In addition to this, EPS should increase to $5.76. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Not only have dividend payouts from SunTrust Banks fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
In terms of its peers, SunTrust Banks generates a yield of 2.7%, which is on the low-side for Banks stocks.
Next Steps:
Whilst there are few things you may like about SunTrust Banks from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three important factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for STI’s future growth? Take a look at our free research report of analyst consensus for STI’s outlook.
Valuation: What is STI worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether STI is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
