Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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.
Popular (BPOP) is headquartered in Hato Rey, and is in the Finance sector. The stock has seen a price change of 31.27% since the start of the year. The company that runs Banco Popular and other banks in Puerto Rico and the U.S. is currently shelling out a dividend of $0.75 per share, with a dividend yield of 2.43%. This compares to the Banks - Southeast industry's yield of 2.23% and the S&P 500's yield of 1.5%.
Looking at dividend growth, the company's current annualized dividend of $3.00 is up 17.2% 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 $11.37 per share, representing a year-over-year earnings growth rate of 26.33%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that BPOP is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Popular, Inc. (BPOP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
