Warren Buffett Is Set to Collect $900 Million in Annual Dividend Income From Bank of America Stock
Bank of America's dividend payout contributes nearly $1 billion to Berkshire's earnings
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Intro
💡 Invest in companies you believe in - W. Buffett
Bank of America remains a key pillar of Berkshire Hathaway’s dividend-generating portfolio, demonstrating resilience and strategic advantages in a shifting economic landscape.
Warren Buffett’s Berkshire Hathaway has reduced its holdings in Bank of America (BAC -0.12%) by over 266 million shares since July 17. Nonetheless, this financial giant is poised to deliver nearly $797 million in dividend income for Berkshire in the coming year, showcasing its enduring value.
History of the Company
Bank of America traces its origins to 1904, when it was founded in San Francisco as the Bank of Italy by Amadeo Giannini. The institution initially focused on providing financial services to immigrants who were often overlooked by larger banks.
![Bank of America goes mobile, literally. A picture from 1967, this vehicle came complete with a bolted-to-the-floor safe and 3 tellers. Why isn't this in use today? [970x615] : r/HistoryPorn](https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8b4bce9a-7cd3-4253-a0e5-1d29e0baf1db_970x615.jpeg "Bank of America goes mobile, literally. A picture from 1967, this vehicle came complete with a bolted-to-the-floor safe and 3 tellers. Why isn't this in use today? [970x615] : r/HistoryPorn")
Over the decades, it grew through significant mergers and expansions, including its transformative merger with NationsBank in 1998, which established it as Bank of America. Today, it stands as one of the largest financial institutions in the world, with over a century of innovation and commitment to customer service shaping its legacy.
🏆 Quite Stable Dividends Over Years, but..
Dividend Champion. 10+ Consecutive Years of Dividends
Bank of America (BAC) demonstrates a solid track record of increasing shareholder returns with 11 consecutive years of dividend growth.
It shows great potential for future dividend payouts, backed by a solid 5-year average dividend growth rate of +52.00%. With a maximum ratio of 8.61, investors can expect an attractive dividend yield over the next 10 years.
The company's conservative 5-year average payout ratio of 28.00% indicates the potential for further dividend increases, emphasizing the company's commitment to rewarding investors while maintaining financial stability.
Important Dividend Notice
Back in dividend history, the company was caught in the perfect storm of the banking crisis in 2008-2010. Dividends were cut by over 90%.
Despite 11 consecutive years of dividend increases since then, Bank of America has yet to return to the 2009 payout levels.
The total dividend payout period is over 30 years of uninterrupted payments.
Key Institutional Investors in Bank of America (BAC)
Major institutional shareholders hold substantial stakes in Bank of America, influencing its governance and market performance as of 2024.
Vanguard Group, Inc. owns 8.18% of shares, totaling approximately 626.22 million shares.
BlackRock, Inc. controls 7.25%, representing around 553.06 million shares.
State Street Corporation holds 4.85% of Bank of America shares, equating to 367.69 million shares.What Makes Nucor Stand Out?
Bank of America Corp (NYSE: BAC)
Financial Score: 94 / 99 ⭐️⭐️⭐️⭐️⭐️
Industry: Banks - Diversified
Dividend Score - 10/10
👉 Learn more about Financial Score
One of Bank of America’s strongest competitive advantages is its exceptional sensitivity to interest rate changes. During the Federal Reserve’s most aggressive rate-hiking cycle in four decades, no major bank reaped more net interest income benefits than BofA. While the central bank has shifted to easing rates, the measured pace of these reductions positions Bank of America to continue originating lucrative loans.
Additionally, strategic investments in technology have enhanced operational efficiency. By the end of September, 77% of customer households were engaged in digital banking, with 54% of loan sales conducted online or via mobile apps—an 11 percentage-point increase compared to three years prior. Digital platforms significantly reduce banking costs compared to traditional in-person services, contributing to BofA’s long-term profitability.
Bank of America Corp - Quick MaxDividends Team Overview
🟢 Analysis of recent reports shows that the company is currently profitable
🟢 Company sales are growing, which indicates business development
🟢 The company's operating profit has continued to grow in recent years, which indicates the stability of its success and management efficiency.
🟢 The dynamics of earnings per share are positive, the company shows good pace and stability in terms of profitability
🟢 The company's business demonstrates a high degree of sustainability and stable income generation.Financial Statement
If you want to stay on top of your portfolio's health, don't forget to check in on the financials of the companies you've invested in. The better shape they’re in, the better your results will be. Keep an eye on their quarterly and annual reports to see how they're performing.
Here is a quick dive into Bank of America Corporation financials over last years
The strongest and most stable companies tend to have a Financial Score of 80+, with the very best ones hitting 90+. If you see that score start to dip below 80, that’s your cue to consider jumping ship before things get worse.
👉 Learn More about Financial Score
Our Paid Members get access to a curated watchlist of 19,000 companies worldwide, all scored by our team on a regular basis.
Recent Bank of America Financial Performance (2024)
As of September 30, 2024, Bank of America posted a net income of $20.5 billion for the first nine months of the year, translating to $2.40 per diluted share. This represents a decline from $23.4 billion, or $2.72 per diluted share, reported during the same period in 2023. The drop in net income is primarily due to increased noninterest expenses and higher provisions for credit losses.
Interesting Fact
Regular company’s stock dividend yield is ~2.00% currently but did you know that BOfA also trades with preferred stocks?
Last week Bank of America Declared $0.375 Dividend on Preferred Shares.
For example, Bank of America’s 6% Non-Cumulative Preferred Series GG (NYSE: BAC.PR.B) just declared a quarterly dividend of $0.375 per share, keeping things steady for income-focused investors with a forward yield of 5.9%.
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Bank of America Competitors
1. JPMorgan Chase & Co (NYSE: JPM)
Financial Score: 94 / 99
Industry: Banks - Diversified
Dividend Track - 15 Consecutive Years
Is a $668.9 billion capitalization global financial services company that offers a wide range of services through three segments. The company's shares are trading at $252.35, and the company's annualized return was +50.22%.
The company's financials are strong, with revenue of $162.1 billion, revenue of $122.3 billion, and EPS of $17.99 for the past 12 months. The dividend yield is 2.10%, with a steady dividend growth rate and a reliable dividend payout.
2. Citigroup Inc (NYSE: C)
Financial Score: 92 / 99
Industry: Banks - Diversified
Dividend Track - 12 Years without reduction. 2 Consecutive Years
Is a diversified financial holding company with a capitalization of $130.8 billion, offering a wide range of services worldwide. The company's shares are trading at $78.27. The company has been performing well, with an annualized return of +50.90%, revenue and earnings growth in recent years, and positive EPS.
Citigroup operates in five segments, including Treasury Services, Securities Trading, Investment Banking, U.S. Retail Banking, and Asset Management. The current dividend yield is 2.86% with a steadily growing dividend.
That said, the company is rated Overvalued. Total revenue for the past 12 months was $69.3 billion and earnings were $70.5 billion.
Final Thoughts: Should You Buy Bank of America?
Bank of America presents a compelling case for consideration within a balanced investment portfolio. Its solid financial health, as evidenced by its financial rating of 94, combined with its consistent profitability and growing sales, paints a picture of a stable and well-managed company. While its profitability over the past 12 months is comparable to some of its competitors, there are other banks that can provide better returns at the moment.
Current Market Value
Undervalued \ Overvalued \ Fairly valued
Compare competitor companies` P/E ratios to find out if the stocks you`re looking to trade are overvalued. We take the P/E average among competitors.
If a company`s current P/E is 20% or more lower than its competitor`s average, the company is considered undervalued. If it is higher by 20% or more, it is overvalued.
P/E ratio is calculated by dividing the market value per share by the earnings per share (EPS).
⚪️ Fairy valued
Compared to competitors and companies with business in this industry, the company is fairly valued. A price reduction of 15-20% would be a great investment point.
Analysts Consensus
The analyst consensus on Bank of America (BAC) shares is generally neutral-bullish, meaning that most specialists see moderate upside potential for the stock price going forward, but do not expect sharp upside. Price targets mostly suggest moderate increases over the next 12 months, and analyst ratings lean toward “hold” or “buy” with a slight bias toward the latter.
The key factors influencing analysts' estimates are the macroeconomic environment, especially interest rates, the quality of the bank's loan portfolio, its ability to generate revenue from various sources, and investments in technology and risk management. It is important to remember that consensus does not guarantee future results and investors should conduct their own research.
To your wealth, MaxDividends Team
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