Bank of America Targeting $17 Billion in Shareholder Payouts



Dividend payouts

Bank of America’s (BAC) dividend payouts have been relatively lower in the industry (IYF), mostly due to stress test performances and a relatively slower pickup of growth over the past few years. The bank is slowly catching up with rewarding shareholders in the form of dividends and repurchases. The introduction of the Financial CHOICE Act, covering deregulation in the financial sector, can allow banks to be more aggressive in terms of payouts and capital ratios.

Bank of America paid a dividend of $0.075 in 2Q17, which was in line with the previous three quarters. This dividend payout translated into a yield of ~1.3%. The bank is planning to return $17 billion over the next four quarters, with a 60% increase in quarterly dividends.

Bank of America’s major competitors posted the following yields:

  • JPMorgan Chase (JPM): ~2.4%
  • Citigroup (C): ~1.1%
  • Wells Fargo (WFC): ~2.9%
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Repurchases and strong returns

Bank of America (BAC) engaged in repurchases of $2.0 billion in 2Q17, compared to $2.3 billion in 1Q17. Its common shares outstanding declined to ~9.9 billion on June 30, 2017, compared to ~10.2 billion in the prior year and ~10.0 billion in the previous quarter. 

The bank’s long-term debt has remained stable at $246.0 billion in 2Q17, compared to $242.0 billion in 2Q16. The bank is targeting $17.0 billion in capital returns, $5.0 billion in the form of dividends, and $12.0 billion in the form of repurchases. The stock buyback should be subject to core operating performance, stock prices, liquidity position, and alternative uses of capital.


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