Dividend Increase: Bank of America (BAC)

So apparently Bank of America (BAC) has passed its stress test administered by the all knowing Federal Reserve (the same fed who has interfered with the free markets too much in the last 20 years).

No exciting news really.  It’s a 50% hike, bringing the new quarterly dividend to $0.075 per share from a previous $0.05.  The $5billion in allowed buybacks is probably bigger news.

If I seem down on the news, you’re right.  It’s just bothersome that the Fed basically controls what the company can do to reward shareholders.  It will be a while for BAC to get back to it’s former self, pre-recession, when they peaked at a $0.64 per share quarterly dividend.  But I guess I have time to wait.  I’m pretty sure the execs are getting huge bonuses from today’s news as well, so they are the real winners here.

This is the first increase allowed by the Fed since about this time in 2014.

Taking into account the new dividend payment, the current yield for BAC will now be around 2.27% based on today’s closing price.  Unless MBS packaged with crap loans from minimum wage earners purchasing their second vacation home becomes a thing again (history always repeats itself, just wait), BAC should easily be able to cover this small dividend.

If you want to find interesting info, you should look into BAC trying to back out of their purchases of CountryWide Financial and Merrill Lynch back in the day.  The government held a gun to BAC’s head if they back out.  Pretty interesting stuff in our “free market” world we live in

For those keeping count, this is 24 of my dividend holdings announcing increases for the year, just 1 decrease (DD).  So, income is growing faster than inflation and spending which is always good and translates to more disposable income.  I’ll take the little extra income from today’s BAC news.

Have a good day.  I’m off to finish my Budweiser beer that says America on the can, although it’s owned by a Belgian company. #confused

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Readers Comments (15)

  1. The name change to America is gross. It’s beer, not a coumtry.

    The Fed’s control is really interesting to watch. Sometimes they don’t do anything when you think they should and sometimes they do so much when nothing would be better. Fascinating stuff.

    • It’ll be interesting if there is a slowdown in the economy (US or China) during our low rate environment. I guess they’d just have to enact another round of QE.

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