StoneCo Ltd. is set to decide on the form of Linx sale proceeds distribution—buybacks or dividends—in April 2026, impacting shareholder return and EPS guidance. The execution will follow the Board's approval within 2026.
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Will the Board approve the Linx proceeds distribution as buybacks or dividends in April, and what is the expected timing of execution?
Analysis of StoneCo Ltd. Board’s Decision on Linx Proceeds Distribution and Execution Timing
The Linx sale closed on February 27, 2025, releasing slightly over BRL 3 billion in capital available for return to shareholders in 2026.
The Board has not yet approved the specific distribution mechanism for the Linx proceeds but expects to make a decision in an upcoming Board meeting in April 2026 with a market announcement to follow.
When discussing capital return strategy:
StoneCo has a clear policy: after approving annual budget and financials, if there are no immediate value-accretive investment opportunities, excess capital is returned to shareholders, primarily through share repurchases (buybacks).
Specifically for ordinary capital distributions (excluding Linx proceeds), the Board has approved BRL 2 billion for buybacks in 2026, fully embedded in their EPS guidance.
Regarding the Linx proceeds distribution options:
If distributed as dividends, the capital return would have no impact on EPS guidance or share count.
If distributed as buybacks, it would reduce share count, generating potential EPS upside beyond current guidance.
The current 2026 and 2027 guidance does not include any impact from the Linx distribution, reflecting the Board's ongoing deliberation on the form of capital return for these proceeds.
The Board meeting to approve the Linx proceeds distribution is expected in April 2026.
Following approval, there will be a market announcement, and the execution would occur subsequently during 2026.
The earlier announced buyback program of BRL 2 billion is already open (announced December 22, 2025), planned to be executed throughout 2026.
The Linx proceeds distribution is seen as an extraordinary capital return, separate from the on-going buybacks related to operational excess capital.
| Item | Detail |
|---|---|
| Linx sale proceeds | Slightly over BRL 3 billion received Feb 27, 2025 |
| Board decision on Linx proceeds | Expected in April 2026 Board meeting, form (buyback vs dividend) undecided |
| Current excess capital approved | BRL 2 billion approved for buybacks in 2026 (ordinary capital return) |
| Impact on guidance | 2026/2027 guidance excludes Linx proceeds distribution; includes BRL 2 billion buybacks only |
| Potential effects | Dividend payout - no EPS/share count impact; Buybacks - reduce share count, potential EPS boost |
| Timing of execution | Post-April 2026 Board approval and market announcement, during 2026 |
StoneCo maintains a disciplined capital allocation policy, only distributing surplus capital after maintaining regulatory ratios, global ratings, and adjusted net cash above zero.
The reduction in the capital hurdle ratio from 20% to 17% reflects a more comfortable capital position that enables these distributions.
The company reiterated commitment to prioritizing operational growth, credit and banking scale-up, and shareholder returns including extraordinary distributions such as Linx proceeds.
The Board has not yet approved whether the BRL 3+ billion Linx sale proceeds will be returned as stock buybacks or dividends; however, the decision is expected by April 2026.
Once approved, market communication will follow, and distribution will be executed within 2026.
Given StoneCo’s capital return philosophy and current guidance inclusions, buybacks are the preferred mechanism for ordinary returns, but the Linx proceeds distribution remains open between buybacks and dividends.
The final choice will have different implications for EPS and share count, with buybacks potentially providing greater EPS accretion.
This analysis relies explicitly on StoneCo Ltd’s 2025 Q4 earnings transcript disclosures regarding capital allocation and Linx sale proceeds 123.
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