Bank of America Corporation (NYSE:BAC) has announced an increase in its quarterly dividend to $0.24 per share, which is expected to yield approximately 3.2%, aligning with the industry standard. The bank's decision reflects a stable payout ratio of one-quarter of earnings and comes with an anticipation of over two percent EPS growth in the next three years.
Since 2013, Bank of America has shown a strong commitment to enhancing shareholder returns, with its annual dividends growing by about thirty-seven percent, reaching $0.96 recently. This growth trajectory is supported by a twelve percent annual increase in EPS over the past five years.
InvestingPro Insights
Bank of America's strategy of enhancing shareholder returns is not only evident in their dividend growth but also reflected in their financial performance. With a market capitalization of $234.33 billion and a P/E ratio that is attractively low at 8.24, the bank is trading at a discount relative to its near-term earnings growth. This is reinforced by the adjusted P/E ratio for the last twelve months as of Q3 2023, which stands at 8.1, suggesting a potential undervaluation of the stock.
InvestingPro Tips highlight that Bank of America has not only raised its dividend for 10 consecutive years but has also maintained these payments for an impressive 53 years. This demonstrates the bank's commitment to consistent shareholder returns. Additionally, the bank's revenue growth has been accelerating, with a 5.74% increase in the last twelve months as of Q3 2023. This aligns with the bank's anticipated EPS growth and strengthens its position as a prominent player in the Banks industry.
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