Business

Tax-free dividends make Brazilian stocks attractive. But will the party end?

With record reductions to the benchmark interest rate, variable income assets are more advantageous — as investors eye tax-free dividends

Tax-free dividends make Brazilian stocks attractive. But will the party end?
Photo: Leremy/Shutterstock

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...

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