Is ALLY’s dividend yield worth the risk?
Ally Financial Inc (NYSE:ALLY) declared on April 13 a quarterly cash dividend of $0.30 per share of the financial company's common stock, payable on May 16 to stockholders of record as of May 2. ALLY offers a dividend yield of 2.68% with a forward dividend of $1.20.
The company also shared a first-quarter earnings and revenue beat just one day later, though analysts aren't responding kindly, as ALLY also shared a drop in profits. Since this report late last week, five analysts have chimed in with price-target cuts. The most recent came from BofA Global Research, with lowered its price objective to $52 from $62. The 12-month consensus price target of $59.26 is still a hefty 33.7% premium to current levels.
ALY has been chopping lower for most of the year, shedding 8.5% in this time period. However, the security did recently break back above the 30-day moving average, which pressured it lower for monst of the month. Moreover, Ally stock trades at a low forward price-earnings ratio of 5.54 but a relatively high price-sales ratio of 1.83.
From a fundamental point of view, Ally stock offers very little consistency and stability. Ally Financial holds $5.06 billion in cash and $17.27 billion in total debt on its balance sheet. ALLY is also estimated to generate limited growth for fiscal 2023, with 0.9% expected earnings growth and 4.7% expected revenues growth, making the stock unideal for long-term investors, despite boasting a decent dividend yield.