Poor Bank of America (BAC) is watching its stock price drop fast. On Friday, BAC hit a new 52-week low as shares fell below $10.50. Unfortunately, Bank of America has no real dividend to offer to be able to prop up its share price.
Earlier this year, bank stocks went on a dividend increase rampage. JPMorgan Chase (JPM), Wells Fargo (WFC), USB (USB) and BNY Mellon (BK) all raised their dividends. Even weak Citigroup got in on the dividend party by reinstating its dividend at $.01 per share. Sadly, all Bank of America could tell investors is that there would be no dividend increase this year.
What made the disappointing news from Bank of America even worse is that the company only asked for a “modest” dividend increase. Yet the Fed didn’t believe the bank was in strong enough position to afford even a minimal dividend.
Since that disappointing announcement in March, Bank of America stock price has fallen 25%. BAC shares have not traded at this low of a level since the summer of 2009. Back then many still questioned whether Bank of America would survive at all.
Now, granted the stock market as a whole has declined over the past three months. The S&P 500 index is down 1.5% and many of the same bank stocks that increased their dividends have seen their stock prices slip.
- JP Morgan Chase – down 8% since announcing its JPM dividend increase
- Wells Fargo – down 17% since announcing its special dividend
- US Bancorp – down 9% since raising its dividend
- BNY Mellon – down 10% since its March dividend increase
- Citigroup – down 15% since reinstating its dividend and announcing a reverse stock split
However, none of these bank stocks come close to the 25% decline that Bank of America has experienced. Plus, they all now offer decent dividend yields to help offset some of the declines in the stock price (except for Citigroup).
CEO Brian Moynihan is still adamant that Bank of America will eventually raise its dividend level. However, he has become very ambiguous about when that dividend increase may occur. Until then, expect Bank of America’s stock price to continue to be hurt by having no dividend to speak of.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.