FIS (FIS) has regularly rewarded its shareholders through dividends and share buybacks (SPY). For 4Q15, it announced dividends of $0.26 per share, flat on a quarterly basis as well as on a year-over-year basis. This translates to an annualized dividend yield of 1.6%, based on the closing price of $66.40 on April 27. The company’s dividend yield is more compelling than those offered by its peers in the financial services space (IYF). Its closest rival, Fiserv (FISV), does not pay dividends at the moment. In comparison, Jack Henry & Associates (JKHY) has a dividend yield of 1.3%. In 2015, FIS paid dividends of $0.10 per share and returned $605 million to shareholders in dividends and share buybacks.
Share repurchase plans
FIS increased its share repurchase authorization to $2 billion in 2014, reflecting the company’s confidence in its current valuations and long-term prospects. Effective until December 2017, this was a replacement for its existing $1 billion share repurchase plan.
However, since the acquisition of SunGard, the company plans to suspend its share repurchase program in order to bring down its leverage ratio. SunGard has almost tripled FIS’s debt ratio, while its ability to generate cost and revenue synergies still remains to be seen.