Madrid-based Banco Santander (SAN) is Spain’s largest bank; the stock has risen 38% so far in 2021, notes Benj Gallander, a specialist in out-of-favor stocks and editor of Contra the Heard.

In addition to its operations in Spain, it is the third largest in Brazil, along with operations in Argentina, Chile, Mexico, Poland, Portugal, the UK, and the United States.

The company has a long, rich history, having been started in 1856 and was profitable year after year until the last annum, when it took the largest loan loss provision of any bank in Europe to the tune of 1.6 billion Euros.

Meanwhile, the corporation rebounded to a profit in the first quarter of this year with black ink of $1.94 billion, exceeding analysts’ expectations. Chairman Ana Botin forecasts that even better results are in store.

Last year, in-line with the European Central Bank’s recommendation, SAN eliminated the dividend. But with the wonderful earnings and the relaxation of the ECB regulations given the economic recovery, a payout has been reestablished.

One would think that it will continue to grow as the corporate goal is to restore a payout of 40-50 percent of the underlying profit. As it increases, there is an excellent chance that the share price will also jump, perhaps to our Initial Sell Target of $8.24. That is well below the $20+ where it traded a number of years ago.

Santander is much more than just a retail bank. The company also provides cash, asset, wealth management, and private banking services. In addition, it is involved in corporate banking, treasury, risk hedging, foreign trade, and investment banking activities.

Throw onto that insurance, payroll management, financial advisory services, renting retail properties and more. It features over 11,000 branches although those are being pared back and there will be some write-downs associated with this process that will dent the bottom line. Overall though, we expect the black ink to continue.

In many ways this bank reminds us of Bank of America (BAC), which we bought at $6.76. Both of them are major players in their markets, and from our perspective in the “too big to fail” category. We finished unloading the BAC position at $38.79 for a 474 percent gain. It has continued to go up since.

At the Contra the Heard Investment Letter, we are happy to hold this stock and look forward to additional capital appreciation. Toss in a dividend and the returns could be luscious. It has already vaulted about 38 percent this year and has done about a double since it joined the portfolio at $2.05 last year.

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