Even after a 37% appreciation in shares in 2022, analysts continue to recommend the shares of the Bank of Brazil (BBBAS3) in dividend reports and portfolios, estimating an increase in earnings in the coming quarters.
In a recent review, for example, XP Investimentos estimated that Banco do Brasil dividends should represent a dividend yield (DY) of 10% in 2023 and 8.5% by the end of 2022.
In addition, even if it is a state-owned company and the elections are close to occur, some analysts still see potential for a return for the shares. BAAS3.
“Although the presidential elections are close and this could bring more volatility, we reiterate our buy recommendation on Banco do Brasil shares,” said BTG Pactual.
Warren also maintains the Banco do Brasil shares in its recommended dividend portfolio for September, with an allocation of 15% – in addition to the allocation of 10% in BBAS3 in its top picks portfolio.
As a comparison, in your portfolio of dividends Warren maintains the same 15% allocation to other high-revenue players, such as Petrobras (PETR4).
Santander also reiterates optimism with the company and expects an even higher dividend yield than XP by the end of 2022, at 9.5%.
For the house, the bank’s papers are the best dividend payers at the moment.
“In addition to having one of the highest yields in the 2022 projections of our coverage, the BB should maintain good profitability throughout 2022, moving towards delivering the top of the guidance”, say the broker’s analysts.
Current indicators of BBAS3
Status Invest data updated on 09/08/2022
The current guidance of Banco do Brasil, it is worth remembering, estimates a net income of around R$ 30 billion in the accumulated of 2022.
Previous estimates were BRL 23 billion to BRL 26 billion in profit in 2022, but were updated after the bank’s latest quarterly balance sheet.
In a report, XP also highlighted the increase in guidance as a positive point for the bank.
“Despite the robust growth of the loan portfolio in recent quarters and the marginal increase in delinquency to 2%, provisions increased slightly in the period and led its coverage ratio to drop to 271% (still the highest in the sector)”, say the XP analysts.
“The combination of a stronger NII and lower cost of credit raised its recurring net income to R$7.8 billion. This implies a ROAE [Retorno sobre patrimônio médio] of 20.6%, a considerable increase of +2.5 percentage points in the quarterly comparison and +6.1 percentage points in the annual comparison”, they follow.
Optimism with Banco do Brasil
the thesis of dividend increase on the bank’s part, it is worth remembering, has been reiterated by analysts for months.
Also in June, as reported by Suno Notícias, analysts classified the bank – at the price at the time – as ‘too cheap to be ignored’ and as the king of dividends among companies on the stock exchange.
“Banco do Brasil was traded at 0.45x price versus book value, compared to 0.7x today. But BB had grown much more than its private peers in the previous 5 years, despite a deteriorating economy,” BTG said at the time.
“Principal capital was much lower than that of private peers, and the Selic rate was not only higher than it is now, but with strong indications that it could increase even more, which means a much higher cost of equity capital as well” , completed the analysts of the house about the Bank of Brazil.