Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



2 Reasons Bank of America Corp Shares Reached a New 52-Week High on Thursday

Shares of Bank of America (NYSE: BAC  ) soared on Thursday following the previous day's comments by Federal Reserve chairwoman Janet Yellen and new predictions the Charlotte-based bank could soon raise its dividend by as much as 400%.

Halfway through the trading session, Bank of America's shares were up by 3%, topping out at $17.98. It's the highest they've been since briefly eclipsing $18 in April of 2010.

It seems safe to say investors are responding first and foremost to the Federal Reserve's comments about future monetary policy. On Wednesday, the central bank intimated it will no longer look exclusively at the unemployment rate to determine when to increase the Fed Funds Rate.

Previously, the central bank said it will begin to move the rate higher once the unemployment rate reaches 6.5%. With the figure now approaching that level -- it was at 6.7% in February according to the Bureau of Labor Statistics -- the news gives banks more time to profit from historically low borrowing costs.

BAC Total Return Price Chart

The second reason for today's performance appears to stem from anticipation Bank of America will not only raise its dividend, but do so by upwards of 400% if it gets regulatory approval to do so next week.

The Wall Street Journal published a table on Thursday showing the "average expectations of analysts polled by Thompson Reuters for large publicly traded U.S. banks participating in the Fed's stress test." According to the data, analysts believe that Bank of America will increase its dividend by 406% for the four quarters straddling the next two years.

Perhaps most surprising is the forecast that Citigroup (NYSE: C  ) will boost its quarterly payout by as much as 1,220%. This is something I've questioned -- most recently, here -- based upon comments from Citigroup's CEO and recent compliance issues concerning its operations in Mexico.

To be clear, however, as the analyst expectations cited by the Journal suggest, there's a decent chance that I'm wrong on this count. And if so, I apologize in advance. Either way, we'll know in less than a week.

The next amazing bank stock
There's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. For the name and details on this company, click here to access our new special free report.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2883691, ~/Articles/ArticleHandler.aspx, 9/4/2015 10:49:06 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

John Maxfield

John is The Motley Fool's senior banking specialist. If you're interested in banking and/or finance, you should follow him on Twitter.

Today's Market

updated Moments ago Sponsored by:
DOW 16,170.22 -204.54 -1.25%
S&P 500 1,929.99 -21.14 -1.08%
NASD 4,708.99 -24.51 -0.52%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 10:32 AM
BAC $15.72 Down -0.22 -1.38%
Bank of America CAPS Rating: ****
C $50.94 Down -0.85 -1.64%
Citigroup Inc CAPS Rating: ***