By Gilmara Santos, special for Monitor
Having a part of the net profit of publicly traded companies, those listed on the Stock Exchange, is the objective of many investors. However, experts warn that it is necessary to be careful with the promise of extra earnings. “Dividend may be an illusion. People think that this is an extra gain, but the value is discounted from the share price, and there is also the fact that the company is withdrawing part of the money that could be invested to share among shareholders, which could have an impact on long-term results”, warns Robinson Trovó, an investment manager with two decades of experience and CNPI-T, CFG and CGA certifications.
He emphasizes that the dividend payment forecast is intrinsically linked to the company’s financial performance. If it is making a profit, the estimate is that a part of this profit will be passed on to shareholders, in proportion to the number of shares they own.
He explains that the payment of these income does not automatically guarantee gains for the investor. The share price is discounted by the value of the dividends distributed, and investors should consider this dynamic when evaluating the attractiveness of a stock. Furthermore, it warns of the possibility that the dividends paid by the company may be lower than the devaluation of the share during the year, resulting in losses for the investor.
“If part of the earnings is being distributed, this company may lose future investment capacity in its growth. In other words, this may be interesting for large corporations, but for smaller companies, this could mean lower growth in the future, or even a devaluation of the share”, he says.
According to him, a case that shows that there should be concerns about dividend-paying stocks was what happened with Intel in 2023. The company faced recent challenges due to technological change; This resulted in a cut in the expected dividend payment by 66%.
“The company was on the lists that highlight the ‘best dividend payers’. This shows that companies that were good payers in the past may not maintain their performance in the future due to changes in their internal conditions or in the market environment”, warns Trovó.
Another view: forget appreciation
Vicente Guimarães, CEO of VG Research, highlights that there are two ways to earn with shares. The first is with the appreciation of shares, which is a more speculative and uncertain focus. The second way is with dividends. “Following this methodology, the investor must focus on growing their dividends, leaving aside concerns about the appreciation of shares”, says Guimarães.
The economist goes further in his recommendation by stating that the drop in the prices of shares that pay dividends should be seen as something positive, since the investor can accumulate more shares while paying a lower price. “In my view, when the price drops there is an incredible opportunity to accumulate good stocks that pay dividends. The advantage of developing an investment strategy like this is that this model guarantees more predictability,” he says.
Ricardo Schweitzer, an independent analyst specializing in dividends, points out that investors who wish to live on passive income should bear in mind that the majority of Brazilian companies do not pay dividends monthly. “Many distribute semi-annually and others quarterly. Therefore, it is not so trivial to set up a portfolio for monthly earnings, as this requires a specific strategy to guarantee a regular income flow”, he warns.
Dividends between 30% and 60% of profits
According to Schweitzer, thinking about the long term, investors should look at stable and defensive sectors, and cites as examples banks, electricity, sanitation, telecommunications and infrastructure. “Such segments tend to be consistent sources of dividends and are less susceptible to economic fluctuations. It is also necessary to remember that commodity producers can distribute good dividends seasonally, but they are not suitable for those who want or need predictability”, says the analyst.
Another tip is to always look at the dividend growth capacity, looking for companies that not only pay consistent dividends, but also have a history of increasing these dividends over time. Such stocks can be especially attractive to investors looking for growing passive income.
“As nothing is that simple, the past does not always reflect the future, and the company must also show signs that it will grow over the next few years. Its performance depends on the reinvestment of part of the profits, which will fuel its maintenance and expansion. Therefore, as a general rule, favor companies that distribute between 30% and 60% of profits”, concludes Schweitzer.
