Stock Analysis

Only Four Days Left To Cash In On Popular's (NASDAQ:BPOP) Dividend

  •  Updated
NasdaqGS:BPOP
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Readers hoping to buy Popular, Inc. (NASDAQ:BPOP) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. If you purchase the stock on or after the 17th of March, you won't be eligible to receive this dividend, when it is paid on the 1st of April.

Popular's next dividend payment will be US$0.40 per share, and in the last 12 months, the company paid a total of US$1.60 per share. Looking at the last 12 months of distributions, Popular has a trailing yield of approximately 2.2% on its current stock price of $72.66. If you buy this business for its dividend, you should have an idea of whether Popular's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Popular

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately Popular's payout ratio is modest, at just 27% of profit.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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NasdaqGS:BPOP Historic Dividend March 12th 2021

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Readers will understand then, why we're concerned to see Popular's earnings per share have dropped 7.4% a year over the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Popular has delivered an average of 22% per year annual increase in its dividend, based on the past five years of dividend payments.

The Bottom Line

From a dividend perspective, should investors buy or avoid Popular? Popular's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.

If you're not too concerned about Popular's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Case in point: We've spotted 3 warning signs for Popular you should be aware of.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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