Brazilian investors are adjusting to a new reality since the beginning of the coronavirus pandemic. The unprecedented monetary response to the crisis saw benchmark interest rates slashed to just 2.25 percent a year, making variable income investments more attractive than ever. This created a near-immediate impact as Brazil’s stock exchange Ibovespa underwent a miraculous recovery after repeated crashes in March. But there is another factor that may make stocks even more engaging for financiers: dividends.
In a report, XP Research analysts noticed that, for the first time in history, dividend yields paid by companies listed on the São Paulo stock exchange outpaced the profitability of Brazil’s benchmark interest rate.