There are three reasons for this. First, it's one of the most erratic blue chip stocks in the market today. With a beta of 2.02, the Charlotte-based bank is more than twice as volatile as the broader market.
Second, while most retirees look to their portfolios for income, Bank of America pays a paltry $0.01 per share in quarterly dividends. This equates to an annual yield of only 0.3%, or well below the S&P 500's 1.98%.
Finally, while many see the bank's low valuation multiple as a good thing -- that is, as an opportunity to get in while it's cheap -- it's also indicative of a troubled company. Why else would a major bank trade for 27% less than book value while better-heeled competitors like Wells Fargo go for a 62% premium?
As Motley Fool contributor John Maxfield discusses in the video below, the conclusion is that Bank of America's stock should probably be avoided if you're nearing or in retirement and preservation of capital is an important priority.
John Maxfield has no position in any stocks mentioned. 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.