Dividend Increases with Lower Debt and Minimal Investment

20 Jun, 2024

Dividend Increases with Lower Debt and Minimal Investment

Brazilian companies are on track to match or exceed last year's R$224 billion in dividends, with lower debt and modest investments easing profit pressures. Major companies are expected to lead the way, offering returns beyond share price gains.

By May, about R$122 billion had already been distributed, according to fintech Meu Dividendo. This suggests the total for 2024 could surpass R$250 billion, up from R$98.42 billion in the same period in 2023. "Historically, 54% of dividends are paid in the second half," said Wendell Finotti, founder of Meu Dividendo.

Despite economic uncertainties, the strong performance of some companies has mitigated these effects, limiting substantial investments and boosting cash flows. "We’re in a better position now, with reduced debt leading to substantial dividend payouts," said Pedro Serra of Ativa Investimentos.

Petrobras leads this year, having disbursed R$36.7 billion in dividends, with an additional R$18 billion expected in June. Despite management changes, Petrobras remains a reliable dividend payer.

Banks, especially Itaú, are also key dividend sources, with Itaú expected to reach nearly a 10% yield. Itaú had already distributed R$22 billion by May, far exceeding last year's total. Financial institutions like Itaúsa, BB Seguridade, and mining giant Vale continue to play significant roles in dividend distributions.