Whether it’s through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Based in Madrid, Banco Bilbao (BBVA) is in the Finance sector, and so far this year, shares have seen a price change of 60.08%. The bank is currently shelling out a dividend of $0.37 per share, with a dividend yield of 4.77%. This compares to the Banks – Foreign industry’s yield of 3.33% and the S&P 500’s yield of 1.52%.
Looking at dividend growth, the company’s current annualized dividend of $0.74 is up 24.4% from last year. Over the last 5 years, Banco Bilbao has increased its dividend 4 times on a year-over-year basis for an average annual increase of 41.97%. 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. Banco Bilbao’s current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.
BBVA is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $1.85 per share, with earnings expected to increase 1.65% from the year ago period.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It’s important to keep in mind that not all companies provide a quarterly payout.
For instance, it’s a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It’s more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, BBVA presents a compelling investment opportunity; it’s not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
