Popular, Inc. Offers One-Year Total Return of 18% (BPOP)
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By: NED PIPLOVIC
Popular, Inc. (NASDAQ:BPOP), a regional bank based in Puerto Rico, has been rewarding its investors with steady share price growth and rising dividends since restructuring and significant asset divestiture that resulted from the 2008 financial crisis in the United States, as well as a recession and a wave of foreclosures in Puerto Rico.
The company’s current 2.1% dividend yield trails below the average yield of the overall Financials sector but outperformed the average yield of the companies in the Foreign Regional market segment. In addition to the return of rising dividends, the company’s shareholders also enjoy a revived asset appreciation with double-digit-percentage total return over the past several years.
While there is still a lot of uncertainty in BPOP’s long-term outlook, investors looking for a recovering stock with growth potential and a double-digit percentage total return might want to do some additional research to determine whether this equity fits with their portfolio strategy. The bank’s next ex-dividend date will occur on May 25, 2018, and the next pay date will follow a little more than five weeks later, on July 2, 2018.
Popular, Inc. (NASDAQ:BPOP)
Founded in 1893 and with its global headquarters in Hato Rey, Puerto Rico, Popular, Inc., provides various retail, mortgage, and commercial banking products primarily to institutional and retail customers in Puerto Rico, the U.S. Virgin Islands and three U.S. states. Additionally, the bank offers loans, investment and securities brokerage, financial advisory and insurance services. Following the 2008 financial crisis and a wave of recession-driven foreclosures in Puerto Rico, the company divested all its locations in California and Illinois, as well as many of its central Florida locations. As of December 31, 2017, the bank owned and operated 168 branches in Puerto Rico, 9 branches in the U.S. Virgin Islands, 11 branches in Florida and a total of 40 branches in New York and New Jersey, primally in the New York Metropolitan area.
The company eliminated its dividend distribution in 2009 and did not start paying dividends again until 2015. However, since resuming its dividend payout in the fourth quarter of 2015, the company has enhanced its total annualized dividend amount 67% by growing annual payouts at an average rate of 18.6% per year. The current quarterly dividend amount of $0.25 converts to a $1.00 annualized payment in 2018 and a 2.1% forward dividend yield. While trailing the 3.16% average yield of the overall Financials sector, Popular’s current yield is 23% ahead of the 1.74% simple average yield of the Foreign Regional Banks market segment.
The company has a current dividend payout ratio of 49%, which is right up against the 50% upper limit of what is considered a sustainable range to support rising dividends over the long term. However, the company’s share price has been rising at a moderate level over the past few years. Therefore, the company may be able to continue growing its share price and divert any excess earnings towards supporting dividend growth.
While following an overall rising trend over the past five years, the price declined nearly 20% over the first half of the trailing 12-month period. After the six-month-long descent, the share price closed on October 23, 2017, at its 52-week low of $32.29. However, after bottoming out in late October, the share price embarked on another six-month trend and this time gained more than 48% before topping out at its 52-week high of $47.87 on April 27, 2018.
Since the late April peak, the share price pulled back 2.4% and closed on May 15, 2018, at $46.71. This closing price was 16.3% higher than one year earlier, 44.6% above the 52-week low from October 2017 and 60% above its level from five years ago.
The recovering share price and the rising dividend distributions delivered an 18.1% total return over the past 12 months. Over a slightly longer period of three years, shareholders enjoyed a total return of nearly 47%.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.