Banco Santander, S.A. (NYSE:SAN)’s Dividend Is Sustainable

Page 1 of 2

I highly recommend the article on Emilio Botin, the Chairman of Banco Santander, S.A. (NYSE:SAN), published by the Financial Times last weekend. The article told the story of how Botin made himself into one of the most powerful individuals in Spain and one of Europe’s most influential bankers. The article states that the bank is sustaining its huge +9.5% cash dividend (although that represents an expected 2013 116% payout ratio) because Botin’s family and their friends finance their lifestyle though SAN’s dividend. My theory is quite different from FT’s. I think Botin and the rest of the Board are clearly trying to give stability to SAN’s payout policy because they understand that the bank should be an income machine for its owners. Botin believes the bank can go through Europe’s recession without having to lower its dividend in a significant way and he is going to make every effort to sustain what he thinks should be the bank’s final end. I couldn’t agree more. Not many banks are run for their shareholders. SAN is a healthy example and I believe Botin when he says that the bank is over the worst.

Banco Santander, S.A. (ADR) (NYSE:SAN)I just bought 500 shares of SAN at $8.22 because I think there is considerable upside potential in the mid-term even if some problems lie ahead. Of course, there is some cause for concern, such as the non-performing loans in Spain that continue to creep up – from 4.2 per cent of the book two years ago to 6.7 per cent right now – or Brazil’s earnings that fell by a tenth. That said, SAN’s income diversification (Latin America generates 50% of attributable profits) and its 10.3% core capital ratio give me some tranquility. I rather have SAN to its main Spanish competitor, Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), since BBVA is more concentrated in the Spanish market. It’s true that BBVA trades at a 15% discount to tangible book compared to SAN and it has a similar core capital ratio (10.7%), but pays a lower dividend and is less strong in Latin America and the UK (where SAN generates over 13% of its profits).

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!