Examining the Dividend History, Yield, Growth, and Sustainability of Bank of America Corp
Bank of America Corp(BAC, Financial) recently announced a dividend of $0.24 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-08-31. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Bank of America Corps dividend performance and assess its sustainability.
About Bank of America Corp
Bank of America is one of the largest financial institutions in the United States, with more than $2.5 trillion in assets. It is organized into four major segments: consumer banking, global wealth and investment management, global banking, and global markets. Bank of America's consumer-facing lines of business include its network of branches and deposit-gathering operations, retail lending products, credit and debit cards, and small-business services. The company's Merrill Lynch operations provide brokerage and wealth-management services, as does its private bank. Wholesale lines of business include investment banking, corporate and commercial real estate lending, and capital markets operations. Bank of America has operations in several countries but is primarily U.S.-focused.
Bank of America Corp's Dividend History
Bank of America Corp's dividend history showcases a firm commitment to rewarding shareholders. The company's Dividends Per Share has seen consistent increments over the years, indicating a solid dividend distribution approach.
Bank of America Corp has increased its dividend each year since 2009. The Stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 14 years.
Bank of America Corp's Dividend Yield and Growth
Dividend growth rates, both on a 3-year and 5-year basis, further shed light on the company's proclivity to increase shareholder returns. The 3-year dividend growth rate and the 5-year dividend growth rate both reveal a pattern of consistent and robust growth.
Bank of America Corp's dividend has changed by 9.20% per year on average over the past three years, which outperforms approximately 62.19% of global competitors. During the past five years, the company's dividend has increased by approximately 15.80% per year on average.
Based on Bank of America Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Bank of America Corp stock as of today is approximately 6.37% per year.
Assessing Dividend Sustainability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Bank of America Corp's dividend payout ratio is 0.25.
Bank of America Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Bank of America Corp's profitability 6 out of 10 as of 2023-06-30, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Additionally, the predictability rank of 3 stars out of 5 suggests that revenue and earnings growth of Bank of America Corp is fairly consistent.
Bank of America Corp's Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. Bank of America Corp's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Bank of America Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Bank of America Corp's revenue has increased by approximately 6.40% per year on average, a rate that outperforms than approximately 50.96% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Bank of America Corp's earnings increased by approximately 5.10% per year on average, a rate that outperforms than approximately 38.41% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 12.50%, which outperforms than approximately 63.64% of global competitors.
Conclusion
Bank of America Corp's consistent dividend payments, robust dividend growth rate, sustainable payout ratio, and strong profitability and growth metrics make it an attractive option for investors seeking steady income. However, like all investments, potential investors should conduct their due diligence and consider their risk tolerance before investing. Will Bank of America Corp continue its trend of consistent dividend growth? Only future performance will tell.
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