Why did Symantec’s EPS turn negative in fiscal 2017 and fiscal 1H18?
Symantec Corporation’s (SYMC) costs and expenses rose 31.0% and 40.0% in fiscal 2017 and fiscal 1H18, respectively. As a result, its operating income fell 122.0% and 156.0% in fiscal 2017 and fiscal 1H18, respectively.
The company’s operating income during both periods turned negative. Other expenses rose 149.0% and 219.0% in fiscal 2017 and fiscal 1H18, respectively, due to higher interest expenses.
These trends led to negative EPS (earnings per share) for both periods, and share buybacks boosted its EPS. Symantec has been unable to generate enough free cash flow to pay off its dividends since 2016.
How has Symantec’s dividend yield evolved over the years?
Symantec Corporation has taken a 50.0% dividend cut in 2017, and its dividend per share remained the same for 2015 and 2016. The company’s 2018 dividend per share is the same as in 2017. Its stock price rose 20.0% on a year-to-date (or YTD) basis compared to 14.0% in 2016.
This trend explains the downward slope of the company’s dividend yield curve. Its dividend yield curve also looks different than the rest of the dividend cutters.
Symantec Corporation has a dividend yield of 1.0% and a YTD return of 19.7%. This compares to a sector average dividend yield of 2.4% and a PE ratio of 258.7x.
Comparison with broad indexes
The S&P 500 (SPX-INDEX) (SPY) offers a dividend yield of 2.3%, a PE ratio of 22.7x, and a YTD return of 15.5%. The Dow Jones Industrial Average (DJIA-INDEX) (DIA) has a dividend yield of 2.3%, a PE ratio of 21.2x, and a YTD return of 18.7%. The NASDAQ Composite (COMP-INDEX) (ONEQ) has a PE ratio of 25.4x and a YTD return of 25.4%.
The WisdomTree International LargeCap Dividend ETF (DOL) is a dividend ETF with 2.0% exposure to technology. It has a PE ratio of 18.0x and a dividend yield of 3.3%.
The WisdomTree DEFA Equity Income Fund (DTH) is a dividend ETF with 1.0% exposure to technology. It has a PE ratio of 17.2x and a dividend yield of 3.8%.