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What Does FIS’s Rich Dividend History Mean for Investors?

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Dividends

Fidelity National Information Services (FIS) has regularly rewarded its shareholders through dividends and share buybacks. For 1Q16, 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 a dividend yield of 1.4% on an annualized basis based on a closing price of $72.40 on May 13.

The company’s dividend yield is compelling when compared to its peers (XLF) (VFH). As its closest rival, Fiserv (FISV) does not currently pay dividends. In comparison, Jack Henry & Associates (JKHY) has a dividend yield of 1.3%.

During the quarter, the company returned $85 million to its shareholders in dividends. In 2015, FIS paid dividends of ~$0.10 per share and returned $605 million to its shareholders in dividends and share buybacks.

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Share repurchase plans

Fidelity National Information Services (FIS) increased its share repurchase authorization to $2 billion in 2014. This reflects the company’s confidence in its current valuations as well as its long-term prospects. This is a replacement for its existing $1 billion share repurchase plan and is effective until December 2017.

However, since the acquisition of SunGard, the company plans to suspend its share repurchase program in order to bring down the company’s leverage ratio. SunGard has almost tripled FIS’s debt ratios while its ability to generate cost and revenue synergies remains to be seen.

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