Why Banco Santander (SAN) is a Great Dividend Stock Right Now
Cash flow can come from bond interest, interest from other types of investments, and, of course, 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 Madrid, Banco Santander (SAN) is in the Finance sector, and so far this year, shares have seen a price change of 96.71%. The financial holding company is currently shelling out a dividend of $0.09 per share, with a dividend yield of 2.02%. This compares to the Banks - Foreign industry's yield of 3.32% and the S&P 500's yield of 1.45%.
Looking at dividend growth, the company's current annualized dividend of $0.18 is up 20% from last year. Over the last 5 years, Banco Santander has increased its dividend 4 times on a year-over-year basis for an average annual increase of 35.07%. 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 Santander's current payout ratio is 18%, meaning it paid out 18% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, SAN expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $0.97 per share, with earnings expected to increase 16.87% from the year ago period.
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.
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. That said, they can take comfort from the fact that SAN is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Banco Santander, S.A. (SAN) : Free Stock Analysis Report
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