Popular (NASDAQ:BPOP) Has Announced That It Will Be Increasing Its Dividend To $0.62
Popular, Inc. (NASDAQ:BPOP) has announced that it will be increasing its periodic dividend on the 2nd of January to $0.62, which will be 13% higher than last year's comparable payment amount of $0.55. The payment will take the dividend yield to 3.0%, which is in line with the average for the industry.
Check out our latest analysis for Popular
Popular's Dividend Forecasted To Be Well Covered By Earnings
Solid dividend yields are great, but they only really help us if the payment is sustainable.
Having paid out dividends for 8 years, Popular has a good history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, Popular's payout ratio sits at 22%, an extremely comfortable number that shows that it can pay its dividend.
Over the next 3 years, EPS is forecast to expand by 13.7%. Analysts forecast the future payout ratio could be 25% over the same time horizon, which is a number we think the company can maintain.
Popular Is Still Building Its Track Record
It is great to see that Popular has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2015, the annual payment back then was $0.60, compared to the most recent full-year payment of $2.20. This works out to be a compound annual growth rate (CAGR) of approximately 18% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Popular has been growing its earnings per share at 19% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
We Really Like Popular's Dividend
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 3 warning signs for Popular that investors need to be conscious of moving forward. Is Popular not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
