Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Based in Hato Rey, Popular (BPOP) is in the Finance sector, and so far this year, shares have seen a price change of 22.07%. Currently paying a dividend of $0.70 per share, the company has a dividend yield of 2.44%. In comparison, the Banks - Southeast industry's yield is 2.36%, while the S&P 500's yield is 1.48%.
Looking at dividend growth, the company's current annualized dividend of $2.80 is up 9.4% from last year. Over the last 5 years, Popular has increased its dividend 4 times on a year-over-year basis for an average annual increase of 12.77%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Popular's current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BPOP expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $10.47 per share, representing a year-over-year earnings growth rate of 16.33%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, BPOP presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Popular, Inc. (BPOP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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