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.
Cash flow can come from bond interest, interest from other types of investments, and, of course, 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 13.61% since the start of the year. The company that runs Banco Popular and other banks in Puerto Rico and the U.S. is paying out a dividend of $0.75 per share at the moment, with a dividend yield of 2.12% compared to the Banks - Southeast industry's yield of 2.12% and the S&P 500's yield of 1.31%.
Looking at dividend growth, the company's current annualized dividend of $3.00 is up 3.4% 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 25%, meaning it paid out 25% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BPOP expects solid earnings growth. The Zacks Consensus Estimate for 2026 is $14.31 per share, representing a year-over-year earnings growth rate of 17.78%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that BPOP is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong 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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