Popular, Inc. (BPOP): A Strong Investment Option in 2025 and Beyond
Popular, Inc. (BPOP) is experiencing a period of growth and stability in its revenue, net interest income (NII), and overall financial performance. The company's strong liquidity profile and consistent capital distributions have analysts optimistic about its future earnings growth prospects.
Estimate Revision Trend
Over the past four years (2020–2024), BPOP's total revenues have witnessed a compound annual growth rate (CAGR) of 5.6%. Additionally, net loans grew at a four-year CAGR of 6.8%, and deposits saw a CAGR of 3.4% during the same period. In the first quarter of 2025, the trend of revenue, loans, and deposits continued to increase on a year-over-year basis.
Rising NII & NIM
BPOP's NII has experienced a four-year (ended 2024) CAGR of 5.3%. The net interest margin (NIM) rose to 3.24% in 2024 from 3.13% in 2023, up from 3.11% in 2022 and 2.88% in 2021. Looking ahead, management anticipates continued growth in NII and NIM, driven by the repricing of its investment portfolio and new loan originations, as well as lower deposit costs.
Earnings Strength
In the last three to five years, BPOP has witnessed EPS growth of 6.05%, higher than the industry average of 5.27%. The company's projected EPS growth rate is 17.11% compared with the industry average rate of 14.07% in 2025. BPOP has an impressive earnings surprise history, with its earnings surpassing the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 11.82%.
Strategic Initiatives
In 2022, Popular launched a multi-year transformation initiative to address evolving client needs and maintain competitiveness. The company focused on investing in its tech infrastructure and adopting agile practices to enhance the digital client experience, streamline employee processes, and drive efficiency and profitability. As part of this effort, BPOP acquired key customer channels from Evertec in 2022 to accelerate digital transformation. In 2023, it invested $300 million in technology infrastructure to support secure and innovative digital banking platforms.
Strong Liquidity Position
The company maintains a solid liquidity profile. As of March 31, 2025, the company's liquidity stood at $6.6 billion. Its total debt aggregated to $1.4 billion, maintaining a conservative balance sheet. Given substantial liquidity, we believe that Popular is not likely to face problems repaying its borrowings in the near term, even if the economic situation worsens.
Impressive Capital Distribution
Popular continues to return value to shareholders through dividends and buybacks. In November 2024, the company increased its quarterly dividend by 12.9% to 70 cents per share. The company has increased its dividend four times in the past five years, with a 29% dividend payout ratio. It has a current dividend yield of 2.6%. In addition, it has a share repurchase program. In August 2024, the company announced a $500 million share repurchase authorization. Given the favorable payout ratio and solid liquidity, such capital distribution activities seem sustainable.
Currently, the company sports a Zacks Rank #1 (Strong Buy). Some other top-ranked stocks in the same space are United Bankshares (UBSI) and First BanCorp (FBP), each flaunting a Zacks Rank of 1. If you're interested in learning more about these top-performing stocks and receiving the latest recommendations from Zacks Investment Research, download their free report today!
[Images: Figures depicting NII and NIM growth, liquidity position, and capital distribution]
