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Total System Services’ Share Repurchases and Dividend Payments

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Mar. 8 2018, Updated 9:02 a.m. ET

History of capital return

Total System Services (TSS) has a strong capital return policy through share buybacks and regular dividend payment plans. In fiscal 2017, TSS returned nearly $363.0 million in share repurchases and dividend payments to its stakeholders. In fiscal 2016, the company returned $103.0 million. 

Investors earned a total yield of 2.2% in fiscal 2017. In the last five years, the company returned ~$1.2 billion of capital to its shareholders on a combined basis.

The graph above shows that TSS returned capital to its shareholders in the last five years through dividend payments and share repurchase at an average of $237.0 million each year.

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Dividend analysis

After a gap of four years, Total System Services (TSS) increased its quarterly dividend by 30.0% to $0.13 per share in 2017. In 2017, the company paid $73.0 million as its dividend, up 7.6% annually. TSS’s dividend yield is 0.59%. The dividend yields of peers Visa (V) and Mastercard (MA) came in at 0.67% and 0.56%, respectively.

Total System Services’ free cash flow at the end of fiscal 2017 stood at $660.5 million. In the last five years, the company’s average free cash flow was nearly $474.0 million, which always remained higher than the total capital returned each year.

The company’s declining debt leverage ratio from ~3.2x to ~2.7x can also act as a catalyst for TSS to boost its future capital return policy. However, rising capital expenditures can impact its future free cash flow going forward. TSS incurred capital expenditures of $196.0 million in fiscal 2017, up 37.1% year-over-year.

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