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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Banco Santander-Brazil in Focus
Headquartered in Sao Paulo Sp, Banco Santander-Brazil (BSBR) is a Finance stock that has seen a price change of -6.02% so far this year. Currently paying a dividend of $0.14 per share, the company has a dividend yield of 6.83%. In comparison, the Banks - Foreign industry's yield is 1.77%, while the S&P 500's yield is 1.36%.
In terms of dividend growth, the company's current annualized dividend of $0.55 is up 1.1% from last year. In the past five-year period, Banco Santander-Brazil has increased its dividend 3 times on a year-over-year basis for an average annual increase of 14.73%. 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-Brazil's current payout ratio is 18%, meaning it paid out 18% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for BSBR for this fiscal year. The Zacks Consensus Estimate for 2021 is $0.75 per share, representing a year-over-year earnings growth rate of 7.14%.
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 their 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 BSBR is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Banco Santander Brasil SA (BSBR) : Free Stock Analysis Report
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