Here's a summary of Bank of America's dividend growth metrics courtesy of Seeking Alpha Premium.Īdjusting for the expected increase in the quarterly dividend, Bank of America stock is now trading at a forward yield of just over 2%, which is not eye-popping yet very attractive considering my expectations for continued dividend growth in the next few years. The virus-induced recession was also managed successfully, which confirms that the financial crisis of 2008 was a one-off event in which the bank failed to make ends meet. When we talk about the dividend history of Bank of America, long-term-oriented investors should know that the bank did raise the dividend even during the dot-com bubble. The bank could not raise the dividend until 2014, but since then, the payout has increased every year through 2020. If we take a look at the dividend history of Bank of America, the worst hit came during the financial crisis when the bank was forced to cut the dividend almost entirely (from an annual payout of $2.24 in 2008 to just 4 cents in 2009). For those of you wondering when Bank of America pays the quarterly dividend, the bank has consistently distributed the dividends in the following months for many decades. With the Fed allowing banks to increase dividends once again, Bank of America jumped on the opportunity to reward its shareholders by announcing a 17% boost to its quarterly dividend from 18 cents to 21 cents per share, starting from the third quarter. As illustrated below, the actual capital ratios in the fourth quarter of 2020 were much higher than the minimum capital ratios that would be required to weather "severely adverse" macroeconomic conditions. The Fed, however, changed its stance on dividends and buybacks after evaluating the latest stress test results in June. Last year, the Fed limited the ability of banks and other financial institutions to distribute capital to shareholders in the form of dividends and buybacks. What is Bank of America's current dividend?īank of America currently pays a quarterly dividend of 18 cents per share, which has not changed since the third quarter of 2019. Even on the back of the stellar performance of Bank America stock in the last 16 months, I am convinced that the stock is still a very attractive buy for both value and income-oriented investors.
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More than a year later, BAC is up over 100%, and the bank recently announced a decision to hike the quarterly dividend by 17% starting from the third quarter of this year.
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Even at the height of uncertainty back then, I strongly believed in Bank of America's ability to weather the storm to see light at the end of the tunnel because of its strong liquidity position. I believe this is exactly why Bank of America Corporation ( NYSE: BAC ) stock declined more than 50% between February 18 and March 23 last year, when the market realized that the United States economy was heading into rough seas.
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Regardless of how hard we try to forget what happened during the global financial crisis of 2008, the memories continue to haunt us whenever we think about the possibility of a market crash. Felixmizioznikov/iStock Editorial via Getty Images