September 26, 2023
Jumping from work to work just because it's there is bad business

Jumping from work to work just because it’s there is bad business

Word earnings It is music in the ears of an investor seeking passive income. In 2021, the amount distributed by companies on the Brazilian stock exchange more than doubled compared to the previous year, which made a lot of people happy.

According to a survey by TradeMapAs of December 17, nearly R$309 billion has been paid out to investors in the form of dividends for the year 2021.

The hunt for profits has been a bonus for the defensive investor, amid the volatility of the Brazilian market, which has fallen on average by 12% – the first annual decline since 2015.

the Ibovespa, which is the largest stock index on the Brazilian Stock Exchange, currently has profit return (DY) weighted 4.68%. The percentage is lower than Selic, currently at 9.25% and dated in the double digits for next year.

Expand your dividend yield

Dividend yield (DY) is the indicator used to show the relationship between the monetary amount of dividends paid per share by a company and the share price of that same company, in the expression: dividend paid per period / share price.

Even the interest rate, which is back to the same level it was two years ago, has not outperformed the broad consumer price index (IPCA). As a result, variable-income investors looking for a net income above inflation continue to look for the best opportunities.

Performance of IDIV, the index of the largest Brazilian dividend payers, in 2021

Source: TradeMap
Source: TradeMap

With the promise of big payouts in 2022, we live with headlines: “How to Benefit,” “Participate in the Distribution,” “Getting Your Earnings Home,” etc.

But does it make sense to keep jumping from branch to branch in search of companies that will distribute resources?

Editing in quotes

In order to maintain the neutrality of equity between the various shareholders, the term “ex-dividend” is used.

That is, when the company informs that it will do so profit distribution Or interest on equity (JCP), it also has a date when investors will not be eligible to receive the funds.

Imagine that as of January 10, 2022, the stock will be trading without a dividend of R$1, along with the respective payment.

If, at the end of the trading session before January 10, this share costs RRL 10, after the “ex-date”, it will be automatically converted to USD 9, adjusting (deducting) the declared dividend.

Thus, if the investor owns 1,000 shares of this company, when the market opens on January 10, he will receive R$10,000, of which R$9,000 comes from the shareholding position and R$1,000 from dividends received.

In other words, the share capital of each shareholder remains unchanged. The total is the same as the day before, and it is distributed differently.

know more:
Bradesco announced a dividend of R$2.2 billion and interest on equity

It must be said that there is a normal market movement that causes the stock price to return to the previous level, or that when the company announces a payment, potential investors buy the shares in advance to be entitled to it.

However, these are only speculative aspects. In short, the Dividend, by itself, does not generate book value for the investor.

For this reason, it is not worth buying a stock just because the dividend has been declared. When the shares are sold, after the period that entitles them to receive the proceeds, it will already be deducted from the net worth that will fall into the account.

In addition, the period during which the capital is allocated only to receive dividends also represents the opportunity cost that the investor absorbs, being a short-term movement that, in practice, is not favorable in the long run.

treacherous profits

In the same way that there are obvious risks when seeking only to receive dividends and not investing itself in the company, companies that “offer” profit return It may also not be as tall as a flower you can smell.

In pursuit of get-rich-quick investors may be attracted to companies that have a high distribution of market prices, although this is not always good news.

Dividends are not always a sign that a company is in a financial position.

Shortly before entering the judicial reorganization, a welcome (OIBR3) was already showing losses and constantly paying dividends to its shareholders. Over the past five years, telecom stocks have fallen 99.10%.

OIBR3 stock performance in the past five years

Source: TradeMap
Source: TradeMap

Therefore, it is necessary to pay attention to some situations that can increase the DY of companies:

  • Distribution of non-recurring or unusual dividends;
  • increase debt or issue shares to pay dividends;
  • Frequent use of profit reserve to pay receipts.

DY is still an important indicator. if profit return History stable at least, at an attractive level, means that the company tends to reward its shareholders well.

On the other hand, if DY is simply rising as a result of falling stock prices over time, there is a point of interest. The weak performance of stocks in the stock exchange may be cyclical, but it may also show a deterioration in the fundamentals, which will not maintain a high dividend payout.

In the meantime, you also need to look at the earnings growth forecast. If the company’s payments (the part of the profit that is distributed to investors) remain the same, but over the years the profit is greater, then more money will be paid to the shareholders.

But it will not be useful if the balance sheet of the company and the indebtedness of the company are not controlled.

If the company is not able to generate sufficient return to meet its obligations, and therefore its continued existence, there is no reason to distribute dividends.

2022 earnings

This year, the dividend festival should continue. At the moment, profits are not taxed. Depending on the outcome of the tax reform underway in Brasilia (if it is to be resolved in 2022), companies can speed up the distribution process.

The two big dairy cows in the market are Petrobras (PETR4) and Valley (Valley 3). Between 2022 and 2026, the state-owned oil company plans to pay between $60 billion and $70 billion in dividends, according to its business plan.

The miner, which has distributed R$73 billion in recurring and unusual dividends and equity interest (JCP) in the past 12 months, should continue to have strong payments throughout 2022, given its low leverage and steady cash generation, even as it fluctuates. iron ore

Check out some of the earnings already announced for the coming weeks:

Business ribbon Type to push net value
Marco Polo Pomo 4 JCP 4/4/2022 0.03145 Brazilian Real
Itaisa ITSA4 JCP 0113390 Brazilian Real
kopecks CPLE6 JCP 0.091148 BRL
American AMER3 JCP 9/3/2022 0,521082 Brazilian Real
youth JSLG3 JCP 01/31/2022 R $ 0.135235
Multiplan MULT3 JCP 04224065 Brazilian Real
Sanibar SAPR11 JCP 0,497681 Brazilian Real
energissa Engy 11 earnings 2/3/2022 2,20 Brazilian Real
Iochpe Maxion MYPK3 JCP 0.854,720 Brazilian Real
Getnet Jet 11 JCP 02/18/2022 0.271625 Brazilian Real
hapveda HAPV3 earnings 01/21/2022 0.005372 Brazilian Real
pizza Bitez 3 JCP 0.019426 Brazilian Real
faint PNVL3 JCP 03/31/2022 0.03815 BRL
b 3 B3SA3 JCP 1/7/2022 0.04231 BRL
totfs TOTS3 JCP 03/20/2022 0,11050 BRL
United LCAM3 JCP 1/7/2022 0.101582 Brazilian Real
Transfer 3 . movie JCP 01/31/2022 0.106,549 Brazilian Real
Toby TUPY3 JCP 01/27/2022 0.130372 Brazilian Real
new energy NEOE3 JCP 0112045 Brazilian Real
South America SULA11 JCP 04/14/2022 R $ 0.191027
Telefonica fift 3 JCP 0,408035 Brazilian Real
Vivara VIVA3 JCP 0.214141 Brazilian Real
Hyper HYPE3 JCP 1/7/2022 0.262489 BRL

With fixed income back on the radarHowever, the Brazilian investor must weigh the risks of the stock market claiming a premium. However, in the long run, the effect of receiving “snowball” earnings She has already proven herself to be a winner. Just don’t put the cart before the horse.