Monthly Dividends: Why B3 Investors Are Moving to Stocks That Pay Periodic Distributions

The Brazilian stock exchange is going through a transition. While interest rates are falling and inflation persists, investors are seeking alternatives that generate regular cash flow. And here comes an asset that remains on the radar: stocks that pay monthly dividends.

Brazil already has over 18 million investors, according to B3 data. And many of them have discovered a secret: reinvesting the dividends received month after month exponentially multiplies wealth. This is the magic of passive income.

The Appeal of Monthly Dividends: Why B3 is the Destination

Publicly traded companies listed on B3 are legally required to distribute part of their profits to shareholders. But not all do so monthly. That’s precisely why those that uphold this commitment stand out in the market.

When you buy a stock that pays monthly dividends, you stop being just a speculator. You become a partner, with the right to share in the company’s earnings. And the best part: you receive this return regularly, without having to sell anything.

The payment follows a simple logic: the better the company performs, the higher the dividends. And the more shares you hold, the greater your return. This is how wealth is built steadily.

The Major Dividend Payers on B3: Who You Should Know

B3 encompasses various sectors that generate cash flow. See which companies are at the top of this list:

Energy Sector:

• Taesa (TAEE11)
• Cemig
• Aeris (AERI3)

Oil and Gas:

• Petrobras (PETR4 and PETR3)
• PetroReconcavo (RECV3)

Banking Sector:

• Itaú
• Bradesco
• Banco do Brasil (BBAS3)

Mining and Steel:

• Vale
• Gerdau (GOAU4)
• Companhia Siderúrgica Nacional (CSNA3)

Other Profitable Sectors:

• Unipar (chemical/petrochemical)
• Klabin (paper and pulp)
• Marfrig (food)
• Fleury (health)
• SLC Agrícola (agro)
• Porto Seguro (insurance)
• Telefônica (telecommunications)
• BrasilAgro (AGRO3)
• Melnick (MELK3 - civil construction)
• Bradespar (BRAP3 and BRAP4)

These companies operate in essential sectors of the economy, which gives them stability and the capacity to generate consistent dividends.

The 2023 Ranking: Who Distributed the Most to Shareholders

The data speaks for itself. In 2023, the biggest payers were:

These percentages are not accidental. They reflect the robust performance of these companies and their profit-sharing policies. And this trend is expected to continue in 2024, considering the interest rate cuts by the Central Bank and the strong performance of the Ibovespa B3 index last year.

Predictions for 2024: Where Dividends Might Still Be Higher

Based on payment history, market confidence, and economic outlooks, these are the companies likely to continue paying good monthly dividends in 2024:

• Petrobras (oil, gas, and petrochemical sectors)
• Taesa (energy)
• Banco do Brasil (banking)
• BrasilAgro (agribusiness)
• Melnick (civil construction)
• Bradespar (financial)
• Aeris (wind energy)
• PetroReconcavo (oil and gas)

Of course, forecasts are not guarantees. But the historical consistency of these companies provides a solid foundation for those looking to build a dividend portfolio.

How to Identify a Good Dividend Payer: Three Essential Metrics

Not every stock that pays dividends is a good opportunity. Here are the indicators you should monitor:

1. Payout - The Distribution Percentage

This is the fraction of profit that the company commits to returning to shareholders. The higher the payout, the greater the potential return. But beware: a very high payout may indicate that the company isn’t reinvesting in its growth.

2. Dividend Yield (DY) - The Actual Yield

This indicator measures how much you actually earn relative to the invested amount. A high dividend yield is attractive, but should be analyzed together with the company’s financial health.

3. Reputation and Transparency

Assess how the company behaves in the market. Is its management solid? Does it communicate its results well? What do current shareholders say? A company with transparency and strong governance inspires confidence and tends to pay dividends consistently.

Stocks That Pay Monthly Dividends vs. International Stocks: What’s the Difference?

Yes, stocks that pay monthly dividends also exist outside Brazil. American giants like McDonald’s, Walmart, and Johnson & Johnson regularly distribute dividends. The difference lies in frequency, taxation, and opportunities.

In Brazil, dividends are exempt from income tax (you just declare them as tax-exempt income). Abroad, taxation varies. Additionally, exposure to the dollar offers currency diversification for your portfolio.

But B3 offers its own advantages: greater regulatory stability, local market knowledge, and companies you follow daily.

Why Invest in Stocks That Pay Monthly Dividends: The Math of Passive Income

The answer is simple: predictable cash flow.

When you invest in stocks that pay monthly dividends, you don’t rely solely on stock appreciation. Money enters your account every month. And here’s the trick of experienced investors: reinvesting those dividends.

Reinvesting dividends means buying more shares with the received money. This generates more dividends the following month. It’s the snowball effect: your wealth grows exponentially, not linearly.

Additionally:

• Protection against inflation: Essential sector companies can pass on cost increases, maintaining their margins
• Lower volatility: Dividend-paying stocks tend to have less aggressive price swings
• Better long-term returns: The combination of dividends + appreciation outperforms most other assets
• Greater control over your investments: You receive the money regularly and can decide whether to reinvest, buy other stocks, or use it for your needs

Is It Worth It? The Answer is Yes, But With Caveats

Investing in stocks that pay monthly dividends is advantageous if you:

• Have a medium to long-term investment horizon
• Seek to build passive income
• Want to protect your wealth from inflation
• Have a conservative to moderate investor profile

But remember: past dividends do not guarantee future gains. The company’s financial health must be constantly monitored. Analyze financial statements, follow sector news, get to know the management.

And yes, the larger your position (the more shares you hold), the greater your monthly dividends. This turns small investments into solid income streams, provided you start and stay disciplined.

B3 offers a series of opportunities for those who want to live off passive income. The secret is to know the companies, monitor their indicators, and reinvest consistently. That way, you turn monthly dividends into true financial freedom.