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Is Popular (BPOP) Stock Worth Buying on 25% Dividend Hike?
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As previously intended by management, Popular, Inc. (BPOP - Free Report) has announced a dividend hike. The company declared a quarterly cash dividend of 55 cents per share, reflecting a rise of 25% from the prior payout. The dividend will be paid out on Apr 1 to shareholders on record as of Mar 15.
This marks the fourth consecutive annual dividend hike by the company. Prior to this, Popular hiked its dividend by 12.5% to 45 cents per share in May 2021. We believe that such disbursements highlight the company’s operational strength and commitment toward enhancing shareholder wealth.
Considering the last day’s closing price of $88.89, Popular’s dividend yield currently stands at 2.47%. Not only is the yield attractive for income investors, but also it represents a steady income stream. Also, the yield is significantly impressive compared with the industry average of 1.79%.
Apart from regular dividend payments, the company has a share repurchase program in place. This January, Popular announced a $500 worth buyback authorization for 2022.
Investors are always on the lookout for companies with a track record of consistent and incremental dividend payments to bet their money on. While this favorable development makes BPOP stock attractive to investors, let’s check whether it is worth investing to earn this dividend income. Deeper research into the bank’s financial performance and fundamentals will help understand the risks and rewards.
Popular boasts a solid balance sheet. As of Dec 31, 2021, the company had total debt worth $1.06 billion and cash and cash equivalents of $428.4 million. Of the total debt, only $0.8 million is short-term in nature. Thus, given a robust liquidity position and decent earnings strength, the company’s capital deployment activities are likely to remain sustainable.
Also, BPOP’s operations are likely to lend support. The company’s revenues witnessed a compound annual growth rate (CAGR) of 7.9% over the last five years (ended 2021). Given a strong balance sheet position, the company is expected to expand into lucrative businesses. Further, it evaluates its branch network and realigns business per customer needs.
These efforts are expected to continue supporting the top line. BPOP’s 2022 revenues are projected to grow almost 1%, whereas 2023 revenues will likely rise 4.3%.
Further, Popular witnessed earnings growth of 32.3% in the past three to five years, higher than the industry average of 14.2%. Though earnings are expected to decline 17.8% this year, the same is expected to bounce back and grow 5.1% in 2023.
Also, the Zacks Consensus Estimate for the company’s earnings has been revised 12.7% and 10.6% upward for 2022 and 2023, respectively, over the past 30 days. This shows that analysts are optimistic regarding the company’s earnings growth potential.
However, pressure on margins amid relatively low-interest rates remains a major near-term concern for Popular. Continuously increasing costs is another major drag.
Other Banks Taking Similar Steps
Over the past few months, several banks have rewarded their shareholders with dividend hikes. Some of these are Midland States Bancorp, Inc. (MSBI - Free Report) and HomeStreet, Inc. (HMST - Free Report) .
MSBI declared a quarterly cash dividend of 29 cents per share, up 3.6% from the prior payout. The dividend was paid out on Feb 18 to all its shareholders of record on Feb 11.
This increase represents the 22nd consecutive annual hike in Midland States’ quarterly cash dividend. Prior to this, MSBI had announced a 4.5% dividend hike to 28 cents per share in November 2021.
HMST declared a quarterly dividend of 35 cents per share, representing a hike of 40% from the prior payout. The dividend was paid out on Feb 23 to its shareholders on record as of Feb 9.
This marks the third dividend hike by HomeStreet. HMST had earlier increased its dividend by 66.7% to 25 cents per share in February 2021.
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Is Popular (BPOP) Stock Worth Buying on 25% Dividend Hike?
As previously intended by management, Popular, Inc. (BPOP - Free Report) has announced a dividend hike. The company declared a quarterly cash dividend of 55 cents per share, reflecting a rise of 25% from the prior payout. The dividend will be paid out on Apr 1 to shareholders on record as of Mar 15.
This marks the fourth consecutive annual dividend hike by the company. Prior to this, Popular hiked its dividend by 12.5% to 45 cents per share in May 2021. We believe that such disbursements highlight the company’s operational strength and commitment toward enhancing shareholder wealth.
Considering the last day’s closing price of $88.89, Popular’s dividend yield currently stands at 2.47%. Not only is the yield attractive for income investors, but also it represents a steady income stream. Also, the yield is significantly impressive compared with the industry average of 1.79%.
Apart from regular dividend payments, the company has a share repurchase program in place. This January, Popular announced a $500 worth buyback authorization for 2022.
Investors are always on the lookout for companies with a track record of consistent and incremental dividend payments to bet their money on. While this favorable development makes BPOP stock attractive to investors, let’s check whether it is worth investing to earn this dividend income. Deeper research into the bank’s financial performance and fundamentals will help understand the risks and rewards.
Popular boasts a solid balance sheet. As of Dec 31, 2021, the company had total debt worth $1.06 billion and cash and cash equivalents of $428.4 million. Of the total debt, only $0.8 million is short-term in nature. Thus, given a robust liquidity position and decent earnings strength, the company’s capital deployment activities are likely to remain sustainable.
Also, BPOP’s operations are likely to lend support. The company’s revenues witnessed a compound annual growth rate (CAGR) of 7.9% over the last five years (ended 2021). Given a strong balance sheet position, the company is expected to expand into lucrative businesses. Further, it evaluates its branch network and realigns business per customer needs.
These efforts are expected to continue supporting the top line. BPOP’s 2022 revenues are projected to grow almost 1%, whereas 2023 revenues will likely rise 4.3%.
Further, Popular witnessed earnings growth of 32.3% in the past three to five years, higher than the industry average of 14.2%. Though earnings are expected to decline 17.8% this year, the same is expected to bounce back and grow 5.1% in 2023.
Also, the Zacks Consensus Estimate for the company’s earnings has been revised 12.7% and 10.6% upward for 2022 and 2023, respectively, over the past 30 days. This shows that analysts are optimistic regarding the company’s earnings growth potential.
Shares of this Zacks Rank #1 (Strong Buy) bank have rallied 16.7% over the past six months, outperforming the industry’s 8.2% rise. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
However, pressure on margins amid relatively low-interest rates remains a major near-term concern for Popular. Continuously increasing costs is another major drag.
Other Banks Taking Similar Steps
Over the past few months, several banks have rewarded their shareholders with dividend hikes. Some of these are Midland States Bancorp, Inc. (MSBI - Free Report) and HomeStreet, Inc. (HMST - Free Report) .
MSBI declared a quarterly cash dividend of 29 cents per share, up 3.6% from the prior payout. The dividend was paid out on Feb 18 to all its shareholders of record on Feb 11.
This increase represents the 22nd consecutive annual hike in Midland States’ quarterly cash dividend. Prior to this, MSBI had announced a 4.5% dividend hike to 28 cents per share in November 2021.
HMST declared a quarterly dividend of 35 cents per share, representing a hike of 40% from the prior payout. The dividend was paid out on Feb 23 to its shareholders on record as of Feb 9.
This marks the third dividend hike by HomeStreet. HMST had earlier increased its dividend by 66.7% to 25 cents per share in February 2021.