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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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 San Juan, First BanCorp (FBP) is in the Finance sector, and so far this year, shares have seen a price change of 41.78%. The holding company for FirstBank Puerto Rico is currently shelling out a dividend of $0.20 per share, with a dividend yield of 2.72%. This compares to the Banks - Foreign industry's yield of 2.5% and the S&P 500's yield of 1.32%.
Looking at dividend growth, the company's current annualized dividend of $0.80 is up 11.1% from last year. Over the last 5 years, First BanCorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 29.65%. 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. First BanCorp's current payout ratio is 36%, meaning it paid out 36% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FBP for this fiscal year. The Zacks Consensus Estimate for 2026 is $2.40 per share, which represents a year-over-year growth rate of 18.23%.
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.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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 FBP is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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First BanCorp. (FBP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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