Every time I see the ticker symbol for PagSeguro Digital (NYSE: PAGS), it reminds me of a guy I lived with in college.
We were both big New York Yankees fans, and at the time, the Yanks had a third baseman named Mike Pagliarulo. He was an excellent fielder and hit a bunch of home runs. In his second year in the big leagues, he hit 19 home runs, which was a decent number back in the 1980s. He hit 28 and 32 dingers the next two years.
My friend loved him. He’d walk around the house blurting out “Pags!” for no particular reason.
Unfortunately for Pagliarulo and my buddy, Pags never lived up to his early success. His career fizzled after that 32-home-run season, as he never hit more than 15 home runs and only slammed more than nine once.
There’s an interesting parallel here between the original Pags and PagSeguro. Just like Pags began his career hitting a lot of home runs, PagSeguro is off to a big start when it comes to its dividend.
The company has only paid a dividend to shareholders since last year. It delivered a $0.14 per share dividend in June 2025 and then two $0.12 dividends in August and November.
This year, it paid another $0.12 in February and kicked the dividend higher to $0.26 in April. (That $0.26 payout will be paid on June 1 to shareholders of record as of April 22.)
Using the last four quarters of dividends, the yield is 6.7%.
Will PagSeguro be as sure-handed with its dividend as Mike Pagliarulo was at the hot corner?
Source: Bleeding Yankee Blue
PagSeguro Digital is a Brazilian payments processor operating in 17 Latin American countries.
Last year, PagSeguro generated 6.5 billion Brazilian reais (R$) in free cash flow. It paid out R$617 million in dividends for a 10% payout ratio. That was only three quarters’ worth of dividends, but even if you annualized the dividend figure, the company brought in plenty of free cash flow to cover the dividend.
This year, PagSeguro is forecast to bring in R$7.8 billion in free cash flow. There are no forecasts for the amount that will be paid in dividends, but I estimate the company will pay around R$858 million, keeping the payout ratio at a very safe level of 11%.
Assuming free cash flow is anywhere in the ballpark of where it was last year, PagSeguro has plenty of room to pay and continue to raise the dividend, especially when you consider that it is projected to make R$9.2 billion in free cash flow next year.
Just like it was too early to call Mike Pagliarulo a future All-Star in 1986 after his second season as a starter, it’s too early to determine whether PagSeguro’s dividend will be consistent.
While I don’t suspect management has any intention of a dividend cut in the near future, PagSeguro just doesn’t have a long enough history to make an accurate assessment.
However, there is reason to believe management takes the dividend seriously. On this year’s first quarter conference call, CFO Gustavo Bahia Sechin said, “Dividends offer stability and predictability.”
There is nothing concerning about the financials when it comes to the dividend. That being said, given currency fluctuations, it’s possible that American investors could see a lower dividend payment in dollars even if it remains the same in Brazilian reais. Of course, the opposite is also true: Americans could see a bump higher based on the exchange rate.
Either way, at this point, you have to consider that there is some risk to the dividend.
Both Pagses got off to a great start. Let’s hope that PagSeguro’s dividend has more staying power than the former Yankees third baseman.
Dividend Safety Rating: C
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