The Only Reason Bank of America Wouldn’t Raise Its Dividend on March 26

Most analysts and commentators seem to agree that Bank of America will raise its dividend this year. But what if it doesn't? What would cause so many predictions to be wrong?

Mar 14, 2014 at 8:00AM


The majority of evidence suggests Bank of America (NYSE:BAC) will increase its dividend this year. By how much, we don't know. But if everything goes as planned, the bank will let shareholders know on March 26.

However, what if I'm wrong? What if, like last year, shareholders are disappointed? More specifically, what would cause so many analysts and commentators to be off base for a second year in a row?

The answer is simple. While the ability to raise its dividend is contingent upon regulatory approval as a part of the ongoing Comprehensive Capital Analysis and Review process, Bank of America must first request an increase.


If it does, it seems likely the appeal would be granted. The Charlotte-based lender has built up excess capital that's lying fallow on its balance sheet. In addition, its earnings are both larger and more consistent than they were a year ago -- if you'll recall, this was why the bank limited its 2013 request to share buybacks.

This begs the question: Why wouldn't Bank of America ask the Federal Reserve to increase its dividend this year? And it seems to me the answer to this is twofold.

First, it's no secret CEO Brian Moynihan will tread conservatively. He was lambasted after the Fed vetoed Bank of America's plans for a modest dividend increase in 2011. Granted, the bank didn't do itself any favors given its executives had already intimated that a bigger payout would be forthcoming.

And second, Moynihan has been clear he prefers buybacks. "We need to get back most of the shares we issued in the crisis that caused all the dilution," he told Fortune's Shawn Tully almost three years ago.

These reasons aside, I've been clear I believe the bank will bite the bullet this go-around. I could be wrong; I was last year. But either way, we'll know on the afternoon of March 26.

Discover the amazing bank stock that yields 6.2%
Even though you may be waiting for Bank of America to increase it's dividend, that doesn't mean you should let the next two weeks go to waste. Do yourself (and your portfolio) a favor by checking out the high-yielding bank stock that's identified in our free list of nine top dividend stocks. It's one of the best banks in the country and should be in every income investor's portfolio. To learn the identity of this stock instantly and for free, just click here now.

John Maxfield owns shares of Bank of America. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information