Bank of America Seems Serious About Retaining Its Dividend

"...we have not changed our philosophy about the dividend and remain proud of record of 30 straight years of increases."

This is a quote from Bank of America (BAC) CEO Ken Lewis on the company's fourth quarter conference call Tuesday morning, where they announced a profit drop of 95% in the quarter. Apparently in maintaining appropriate capital ratios going forward Lewis may choose to pare back share repurchases, raise capital, etc.; he seemed to indicate that the dividend is either safe or is regarded as sacred to the company's plans. Lewis also projected 2008 profit to be well above $4/share, whereas analysts expect $4.33. 'Well above' $4 per share in profit is a nice increase on 2007's EPS which is now finalized at $3.30/share. Lewis did mention that this is all barring 'a new market shock'.

While this can not be misconstrued as 100% assurance that Bank of America will not cut their dividend, the type of language and emphasis Lewis used has me taking notice. Being a dividend growth investor for the long term, I get really interested when a great company with temporary problems like BAC is yielding 6.8%, and is confident enough to put priority on their long term dividend growth philosophy. This statement tips me off that BAC is serious about maintaining their dividend and will use other means necessary to maintain capital ratios.

Based on this positive dividend and earnings growth guidance, I may add to my position in the coming weeks.

Comments

[Reinko:]

Nice to know that the Bank of America puts so much value in keeping up the dividend! But weirdo weirdo Bernanke also has a website and it is known as federalreserve.gov.

And on Bernankes website you can find lots of nice stuff around the US econmy, most Wall Street traders don't do that because it is all so difficult to understand while Jim Cramer is so much easyer to understand and if Jim fails we will always have Ophra...

Now, here is a FED file that clearly indicates that the whole of the US banking system has only 200 million left in reserves...

Yes you read it right, so use your God given brain; am I right or am I wrong? Just look at the 'non borrowed (3)' column and do your thingking...

Here is the file:

www.federalreserve.gov.../

Do your thinking please...

2008 Jan 23 06:47 PM

[kurt walter:]

They better keep the dividend. Wasting money on Countrywide is bad enough

2008 Jan 24 08:21 PM

[linenoise:]

ha friggin ha

Jan 16 01:32 PM

[moneygardener:]

Glad I didn't add to my position.....what a mess!

Jan 24 07:43 PM