Why Banco Santander (SAN) is a Top Dividend Stock for Your Portfolio

Yahoo

11-07-2025

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 Madrid, Banco Santander (SAN) is in the Finance sector, and so far this year, shares have seen a price change of 88.16%. The financial holding company is currently shelling out a dividend of $0.09 per share, with a dividend yield of 2.11%. 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 $0.18 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.
SAN is expecting earnings to expand this fiscal year as well. 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 many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, SAN is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of #3 (Hold).
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This article originally published on Zacks Investment Research (zacks.com).
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