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 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.
Headquartered in Osasco, Banco Bradesco (BBD) is a Finance stock that has seen a price change of 22.82% so far this year. The financial holding company is currently shelling out a dividend of $0.04 per share, with a dividend yield of 10.44%. This compares to the Banks - Foreign industry's yield of 2.71% and the S&P 500's yield of 1.38%.
Looking at dividend growth, the company's current annualized dividend of $0.43 is up 78.4% from last year. Over the last 5 years, Banco Bradesco has increased its dividend 4 times on a year-over-year basis for an average annual increase of 3.80%. 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 Bradesco's current payout ratio is 7%, meaning it paid out 7% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for BBD for this fiscal year. The Zacks Consensus Estimate for 2026 is $0.50 per share, representing a year-over-year earnings growth rate of 19.05%.
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. 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 BBD is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Banco Bradesco SA (BBD): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).