Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
Banco Santander-Chile in Focus
Banco Santander-Chile (BSAC) is headquartered in Santiago Chile, and is in the Finance sector. The stock has seen a price change of 31.28% since the start of the year. The financial holding company is paying out a dividend of $0.99 per share at the moment, with a dividend yield of 4.01% compared to the Banks - Foreign industry's yield of 3.39% and the S&P 500's yield of 1.57%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.99 is up 74% from last year. Over the last 5 years, Banco Santander-Chile has increased its dividend 3 times on a year-over-year basis for an average annual increase of 9.01%. 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. Banco Santander-Chile's current payout ratio is 25%, meaning it paid out 25% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for BSAC for this fiscal year. The Zacks Consensus Estimate for 2025 is $2.31 per share, which represents a year-over-year growth rate of 22.87%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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 BSAC 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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Banco Santander Chile (BSAC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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