Banco Bradesco S.A. (BBD): A Top Dividend Penny Stock Pick by Hedge Funds

Banco Bradesco S.A. (BBD) has caught the attention of hedge funds, with 15 of them holding positions in the company as of Q3 2024. This interest is driven by several compelling factors that make BBD an attractive dividend penny stock. In this article, we will explore the reasons behind this enthusiasm and discuss whether BBD is indeed the best dividend penny stock to buy according to hedge funds.



1. Undervalued Stock Price: BBD is trading below its intrinsic value of $4.10, according to an updated version of Benjamin Graham's Formula from Chapter 11 of "The Intelligent Investor." This indicates that the stock is relatively cheap compared to its intrinsic value.
2. Low P/E Ratio: BBD has a P/E ratio of 9.6x, which is lower than the US market average of 23.69x and the US Banks - Regional industry average of 14.93x. This suggests that the stock is relatively inexpensive based on its earnings compared to its share price.
3. Dividend Yield: BBD offers a dividend yield of 3.18%, which is attractive for income-oriented investors. The dividend is paid monthly, providing a steady stream of income.
4. Strong Financial Health: BBD has a profit margin of 19.4%, which, although lower than its 5-year average, still indicates a healthy bottom line. The company's debt-to-equity ratio of 10.58 is also manageable, considering its strong earnings.
5. Growth Potential: BBD has shown strong earnings growth of 21.73% in the past year, indicating that the company has the potential for future growth.
6. Hedge Fund Interest: As of Q3 2024, 15 hedge funds held positions in BBD, indicating that these sophisticated investors see value in the stock. This interest from hedge funds can be a positive signal for retail investors.

In conclusion, Banco Bradesco S.A. (BBD) is an attractive dividend penny stock pick according to hedge funds due to its undervalued stock price, low P/E ratio, attractive dividend yield, strong financial health, growth potential, and the interest shown by hedge funds. However, it is essential to conduct thorough research and consider your own risk tolerance before making any investment decisions. As always, it is crucial to stay informed about the latest developments and maintain a balanced portfolio to mitigate risks.