Popular (BPOP) Could Be a Great Choice

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Headquartered in Hato Rey, Popular (BPOP) is a Finance stock that has seen a price change of 4.79% so far this year. The company that runs Banco Popular and other banks in Puerto Rico and the U.S. is paying out a dividend of $0.75 per share at the moment, with a dividend yield of 2.3% compared to the Banks - Southeast industry's yield of 2.19% and the S&P 500's yield of 1.48%.

Looking at dividend growth, the company's current annualized dividend of $3.00 is up 3.4% from last year. Over the last 5 years, Popular has increased its dividend 4 times on a year-over-year basis for an average annual increase of 12.77%. 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. Popular's current payout ratio is 25%, meaning it paid out 25% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for BPOP for this fiscal year. The Zacks Consensus Estimate for 2026 is $14.31 per share, with earnings expected to increase 17.78% from the year ago period.

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.

Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that BPOP 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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Popular, Inc. (BPOP): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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