Bank of America Increases Common Stock Dividend 8% to $0.26 Per Share, Authorizes $25 Billion Stock Repurchase Program

Rhea-AI Summary

Bank of America announced an 8% increase in its quarterly cash dividend to $0.26 per share, payable on September 27, 2024, to shareholders of record on September 6, 2024. The company's Board also authorized a $25 billion stock repurchase program, effective August 1, 2024, replacing the existing program with a remaining $6.7 billion repurchase capacity as of June 30, 2024. The new repurchase program aims to return excess capital to shareholders while maintaining regulatory capital levels and supporting business growth. Additionally, a regular quarterly cash dividend of $1.75 per share was declared for the 7% Cumulative Redeemable Preferred Stock, Series B, payable on October 25, 2024, to shareholders of record as of October 11, 2024.

Positive

• Bank of America increased its quarterly cash dividend by 8% to $0.26 per share.
• New $25 billion stock repurchase program authorized.
• Repurchase program starts August 1, 2024, enhancing capital return to shareholders.
• Total dividend payout for common stock increased, benefiting shareholders.

Negative

• None.

Insights

Financial Analyst

Bank of America's latest dividend increase and stock repurchase program announcement signals a strong financial position and confidence in future performance. The 8% dividend hike to $0.26 per share demonstrates the bank's commitment to rewarding shareholders and suggests robust earnings growth. This move aligns with the broader trend in the banking sector of increasing dividends post-stress tests.

The authorization of a new $25 billion stock repurchase program is particularly noteworthy. This substantial amount, replacing the current program with $6.7 billion remaining, indicates significant excess capital. It's a clear sign that Bank of America believes its stock is undervalued and sees share buybacks as an efficient use of capital.

However, investors should note the cautionary language regarding capital distributions. The bank's ability to execute these plans depends on maintaining regulatory capital levels, which could be impacted by economic conditions or regulatory changes. The flexibility in timing and amount of repurchases also suggests a prudent approach, allowing the bank to adjust to market conditions.

From a broader perspective, this move reflects confidence in the bank's ability to generate strong cash flows and maintain a robust capital position. It's a positive signal for the banking sector's health and could potentially lead to increased investor interest in financial stocks.

Market Research Analyst

Bank of America's announcement carries significant implications for both the company and the broader market. The 8% dividend increase positions BofA as an attractive option for income-seeking investors, especially in the current high-interest rate environment. This move could potentially trigger a shift in investor sentiment towards banking stocks, which have faced challenges due to recent sector volatility.

The $25 billion stock repurchase program is particularly intriguing. It represents approximately 10% of the company's market capitalization, a substantial commitment that could significantly boost earnings per share. This aggressive buyback strategy might set a precedent for other large financial institutions, potentially leading to a sector-wide trend of increased shareholder returns.

However, it's important to consider the broader economic context. With ongoing concerns about inflation and potential recession, Bank of America's optimistic capital return policy could be seen as a contrarian indicator. Investors should closely monitor how this strategy aligns with the bank's loan loss provisions and overall risk management approach in the coming quarters.

Lastly, the timing of this announcement, coming shortly after the Federal Reserve's stress test results, suggests that Bank of America has not only passed but exceeded regulatory expectations. This could boost investor confidence in the bank's risk management practices and overall financial health.

CHARLOTTE, N.C., July 24, 2024 /PRNewswire/ -- Bank of America Corporation today announced the Board of Directors declared a regular quarterly cash dividend on Bank of America common stock of $0.26 per share, up $0.02 from the prior quarter. The dividend is payable on September 27, 2024 to shareholders of record as of September 6, 2024.

The Board also authorized a new $25 billion common stock repurchase program, effective August 1, 2024, to replace the company's current program, which will expire on that date. As of June 30, 2024, the current program had approximately $6.7 billion in common stock repurchases remaining. Today's authorization will continue to provide additional capital return flexibility going forward, in line with the company's commitment to return to shareholders excess capital that is not needed to support economic growth, deliver for customers and communities, invest in the future and sustain strength and stability through the economic cycle.

Bank of America's ability to make capital distributions depends, in part, on its ability to maintain regulatory capital levels above minimum capital requirements.

The timing and amount of common stock repurchases made pursuant to the Bank of America common stock repurchase program are subject to various factors, including the company's capital position, liquidity, financial performance and alternative uses of capital, stock trading price, regulatory requirements and general market conditions and may be suspended at any time. Such repurchases may be effected through open market purchases or privately negotiated transactions, including repurchase plans that satisfy the conditions of Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

The Board also declared a regular quarterly cash dividend of $1.75 per share on the 7% Cumulative Redeemable Preferred Stock, Series B. The dividend is payable on October 25, 2024 to shareholders of record as of October 11, 2024.

Forward-Looking Statements

Certain statements contained in this news release may constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the current expectations, plans or forecasts of Bank of America based on available information. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. These statements often use words like "expects," "anticipates," "believes," "estimates," "targets," "intends," "plans," "predict," "goal" and other similar expressions or future or conditional verbs such as "will," "may," "might," "should," "would" and "could." Forward-looking statements speak only as of the date they are made, and Bank of America undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.

Forward-looking statements represent Bank of America's current expectations, plans or forecasts of its future results, revenues, expenses, dividends, efficiency ratio, capital measures, and future business and economic conditions more generally, and other future matters. These statements are not guarantees of its future results or performance and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict and are often beyond Bank of America's control. Actual outcomes and results may differ materially from those expressed in, or implied by, any forward-looking statements due to a variety of factors. You should not place undue reliance on any forward-looking statement and should consider all of the precautionary statements, uncertainties and risks discussed in Bank of America's filings with the Securities and Exchange Commission (SEC), including under Item 1A. "Risk Factors" of Bank of America's Annual Report on Form 10-K for the year ended December 31, 2023, and in any of Bank of America's other subsequent SEC filings.

Bank of America

Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 69 million consumer and small business clients with approximately 3,800 retail financial centers, approximately 15,000 ATMs (automated teller machines) and award-winning digital banking with approximately 58 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and more than 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

For more Bank of America news, including dividend announcements and other important information, visit the Bank of America newsroom and register for news email alerts.

Investors May Contact: 

Lee McEntire, Bank of America
Phone:  1.980.388.6780
lee.mcentire@bofa.com

Jonathan Blum, Bank of America (Fixed Income)
Phone:  1.212.449.3112
jonathan.blum@bofa.com

Reporters May Contact:

Jocelyn Seidenfeld, Bank of America
Phone: 1.646.743.3356
jocelyn.seidenfeld@bofa.com

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SOURCE Bank of America Corporation

FAQ

What is the new dividend per share for Bank of America common stock?

The new dividend per share for Bank of America common stock is $0.26, up $0.02 from the prior quarter.

When is the dividend payable for Bank of America common stock?

The dividend is payable on September 27, 2024, to shareholders of record as of September 6, 2024.

What is the value of Bank of America's new stock repurchase program?

Bank of America's new stock repurchase program is valued at $25 billion.

When does Bank of America's new stock repurchase program become effective?

The new stock repurchase program becomes effective on August 1, 2024.

How much capital was remaining in Bank of America’s current stock repurchase program as of June 30, 2024?

Approximately $6.7 billion was remaining in the current stock repurchase program as of June 30, 2024.

What is the dividend for Bank of America's 7% Cumulative Redeemable Preferred Stock, Series B?

The dividend for Bank of America's 7% Cumulative Redeemable Preferred Stock, Series B is $1.75 per share.

When is the dividend payable for Bank of America's 7% Cumulative Redeemable Preferred Stock, Series B?

The dividend is payable on October 25, 2024, to shareholders of record as of October 11, 2024.