Seeking Alpha

BofA again requests nickel dividend

  • The bank last March originally received Fed permission to boost its quarterly payout from $0.01 to $0.05 (along with a $4B buyback), but was forced to withdraw that plan after discovering it miscalculated capital levels.
  • Bank of America (BAC) subsequently fixed the accounting issue and resubmitted a capital plan in May, and the WSJ reports the lender is requesting the same size dividend, though the buyback plan has been toned down.
  • For the bank - which has made boosting the dividend a top priority - the move projects to the Fed a sign of strength and that there are no more accounting cockroaches out there. For the Fed, its decision will establish a precedent for how these errors might be dealt with in the future.
  • All this is happening as pressure mounts for BofA to come to a settlement with the DOJ over mortgages, and word is Eric Holder has no interest in talking turkey with Brian Moynihan until their lieutenants get a lot closer to a final deal.
  • Shares -1.6% premarket as S&P 500 futures tumble
Comments (19)
  • funfun
    , contributor
    Comments (3253) | Send Message
     
    This profoundly malmanaged Bank is finally getting around to raising its paltry penny dividend each quarter?…years behind its superior-managed rivals. In the past decade, the colossal corruption in the executive suites and Boardroom of this Bank has wreaked enormous damage on its long-suffering BAC shareholders, who have seen the stock lose 70% of its value in the past eight years. …funfun..
    10 Jul 2014, 07:50 AM Reply Like
  • Dirty Capitalist
    , contributor
    Comments (178) | Send Message
     
    Funny (funfun) I have made a ton of money off my BAC holdings. I just didn't ride it down, but was adding to shares on the way up. I guess you weren't smart enough to sell on a downtrend? Not very bright indeed.

     

    Oh, another thing. Why do your comments (your choice of alliteration, specifically used as an affectation) make them sound like a Batman comic book?
    10 Jul 2014, 08:29 AM Reply Like
  • funfun
    , contributor
    Comments (3253) | Send Message
     
    Ha, ha…these hostile hecklers heaped with hate and hubris are now literary critics telling other commentators how to write their thoughts?

     

    The undersigned has no position in BAC currently, and has never been a long-term investor in BAC, but has traded it on several occasions in the past five years, each time profitably. We avoid this Bank, because in comparison to superior-managed rivals, such as BB & T, U. S. Bancorp, and Glacier Bancorp, Bank of America is unquestionably inferior-managed, historically chock full of actionable malfeasance.

     

    …funfun..
    10 Jul 2014, 08:39 AM Reply Like
  • chongkim74
    , contributor
    Comments (1181) | Send Message
     
    Ur a downerdowner. I puked in my mouth a little reading ur poetic justice comments again…Enough already.
    10 Jul 2014, 09:01 AM Reply Like
  • gratefuldwg
    , contributor
    Comments (41) | Send Message
     
    People who sign off with their name, especially one like "fun fun" are not telling the truth. They got burned, and thats all there is for this story.
    10 Jul 2014, 09:15 AM Reply Like
  • Wow72
    , contributor
    Comments (584) | Send Message
     
    If I only had a dime for every time I heard Wrongwrong say "hostile hecklers"...
    10 Jul 2014, 04:31 PM Reply Like
  • Doctor Who
    , contributor
    Comments (363) | Send Message
     
    Fun fun-----where is my tax rebate check from the TARP profit from BAC? Are you listening?

     

    Darlick Khan
    10 Jul 2014, 08:02 AM Reply Like
  • User 9701881
    , contributor
    Comment (1) | Send Message
     
    It's about time!
    10 Jul 2014, 08:26 AM Reply Like
  • Eightball
    , contributor
    Comments (144) | Send Message
     
    Get back to me when it's approved and actually paid!
    10 Jul 2014, 08:44 AM Reply Like
  • chongkim74
    , contributor
    Comments (1181) | Send Message
     
    You're a downerdowner. I puked in my mouth a little reading ur poetic justice comments again…Enough already..lol
    10 Jul 2014, 09:02 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (9573) | Send Message
     
    A 5x dividend increase?

     

    There are no other large cap stocks that can come close to that sort of dividend growth.

     

    If you are going to be retired and living on a fixed income within the next few years you really want to load up on (C) and (BAC) now before the stocks are double the price and the dividends are 10x current payouts.

     

    Strong Buy.
    10 Jul 2014, 09:07 AM Reply Like
  • Slick E
    , contributor
    Comments (135) | Send Message
     
    I don't own BAC, so I've got no dog in this fight, but this comment seems odd to me.

     

    Yes, this is a 5x dividend increase...but using that as a gauge of continuing dividend growth doesn't make sense because it discounts the fact that they're just playing catch up.

     

    But let's say you're right and the dividend improves 10x in the short term. That would move the YOC all the way up to 2.6%, or slightly less than what WFC is paying right now without factoring any dividend growth in on their side.

     

    If you're in it for the capital appreciation, that's one thing. But big dividend growth numbers don't really excite me on miniscule initial yields. Doubly so on a company that is currently hoping to "move up" to less than 10% of what it paid only a few years ago.

     

    Just my opinion though.
    10 Jul 2014, 10:52 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (9573) | Send Message
     
    Slick E, the idea is that 10 years down the road EPS is perhaps triple what it is now and P/E expansion gives you a stock worth around $40 per share.

     

    If one loads up now, with the tiny dividends, then the cap appreciation along with the stunning dividend growth would (over time) offer more serious income than someone buying (WFC) today @ well over TBV.

     

    (http://bit.ly/AFoBq4) is the superior company but over time and at current prices (http://bit.ly/v9b99Q) will generate more income with the same initial investment IMHO.
    10 Jul 2014, 11:47 AM Reply Like
  • Slick E
    , contributor
    Comments (135) | Send Message
     
    Sure, agreed on the capital appreciation, if that is the goal.

     

    Strictly from the dividend growth perspective though, you can't expect that level of growth to be consistent. When dealing with miniscule numbers (like a 1 cent dividend), an increase that looks modest with a higher existing dividend looks outrageously great all of a sudden.

     

    You can't expect that quintupling is a realistic dividend growth model for BAC, right? It's not like next year the dividend will jump to 25 cents and then $1.25 the following year.

     

    The yield is going up ~1%, and that is certainly good. I don't feel it's truly explosive growth though in the sense that it's only noteworthy because the initial number is so putridly small. Jump from 41 cents to 45 cents and you've got a nice 10% raise. Jump from 1 cent to 5 cents and it's "explosive" all of a sudden. That might be true for a smaller company that is just getting its dividend feet under it, but not BAC in my opinion.
    10 Jul 2014, 12:41 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (9573) | Send Message
     
    BAC doesn't have to increase the dividend 5x EVERY year.

     

    Averaging a 20% annual increase over the next decade will put it in the winner's circle.

     

    Imagine a $30 stock purchased for $10 but paying a $1.50 dividend.

     

    For those who took advantage of the low stock price when the future was murky those dividend payments are going to be mighty sweet when you consider what they paid to get that income stream.
    17 Jul 2014, 11:36 PM Reply Like
  • Islandtime
    , contributor
    Comments (30) | Send Message
     
    I bought BAC a couple of years back when it tanked down to the mid single digits and have ridden along through all of the noise. It makes zip sense to me to be a seller after all of pain BAC has experienced since it bought the horrible mortgage company Countrywide. My target was and still is $18.
    10 Jul 2014, 10:52 AM Reply Like
  • Uncle Pie
    , contributor
    Comments (3478) | Send Message
     
    maybe the fed will allow them to pay a dividend in wooden nickels.
    10 Jul 2014, 12:19 PM Reply Like
  • jackooo
    , contributor
    Comments (1611) | Send Message
     
    Until Holder and Obama are gone the troubles will not recede. The idea is to squash the American economy and businesses.
    12 Jul 2014, 05:00 PM Reply Like
  • Islandtime
    , contributor
    Comments (30) | Send Message
     
    Their earnings looked good overall, except that their legal expenses tanked their results, again. And imo, that may be the same scenario we see for the next couple of quarters as they still have a big billion(s) dollar bill to pay to the feds.
    16 Jul 2014, 02:03 PM Reply Like
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