Bank of America (BAC) is planning a payout of $17.0 billion, forming ~7.2% of the total market cap over the next four quarters in the form of dividends and repurchases. The bank is planning a 60.0% hike in dividends from the current payout of $0.075 per share in 2Q17. Dividend payouts and yields have been lower in the banking sector (IYF), which has been subject to stress test performances and a slower pickup of growth over the past few years.
Bank of America is slowly catching up with shareholders’ payouts amid improving operating performance and risk management. The bill introducing the Financial CHOICE Act, if cleared by the Senate, would allow banks to be more aggressive in terms of payouts and capital ratios.
Bank of America’s major competitors posted the following yields:
Repurchases and strong returns
Bank of America engaged in repurchases of $2.0 billion in 2Q17, which was lower than $2.3 billion in 1Q17. Its common shares outstanding fell to ~9.9 billion as of June 30, 2017, from ~10.2 billion in the prior year and ~10.0 billion in the previous quarter. The bank is planning to repurchase $12.0 billion worth of its own stock over the next four quarters, reflecting rising payouts. The stock buyback will be subject to operating performance, stock prices, valuations, liquidity position, and alternative uses of capital.
Bank of America’s long-term debt has remained stable at $246.0 billion as of June 30, 2017, compared to $242.0 billion in the prior year.