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Will Bank of America Double or Quadruple Its Dividend This Month?

By John Maxfield - Mar 10, 2014 at 1:49PM

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It's the time of year when bank shareholders learn whether their quarterly dividend checks will go up.

Shareholders in Bank of America ( BAC 1.27% ) could get very good news over the next few weeks. On March 26, the Federal Reserve is expected to release the results of its 2014 Comprehensive Capital Analysis and Review, which dictates whether the nation's largest banks can increase dividends and share buybacks.

In last year's test, Bank of America decided against seeking permission to up its quarterly payout. It chose instead to increase repurchases of common and preferred stock. At the time, the bank intimated that its earnings stream wasn't consistent enough to warrant a dividend hike.

The story is now different. Bank of America has more than enough capital to fund a higher payout without dipping below the regulatory requirements. In addition, its earnings are much healthier and predictable. It's for these reasons that analysts predict the Charlotte-based lender may have asked to double or quadruple its dividend this year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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