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8 Cheapest Dow Dividend Stocks for 2011

2. Bank of America (BAC - Get Report) is a financial-services company. It's the top mortgage lender in the U.S.

Quarter: Bank of America's third-quarter loss widened to $7.3 billion, or 77 cents a share, hurt by a goodwill impairment charge in its credit card business due to a new regulatory rule. The company swung to an adjusted profit of $3.1 billion, or 27 cents, from a year-ago loss. Revenue fell 2%. The gross margin jumped from 43% to 66% and the operating margin climbed from 11% to 31%. Bank of America has $840 billion of debt, equal to a debt-to-equity ratio of 3.6.

Valuation: Bank of America's stock sells for a forward earnings multiple of 7.6, a book value multiple of 0.5, a sales multiple of 0.8 and a cash flow multiple of 1, 32%, 42%, 51% and 95% discounts to diversified financial services industry averages. Bank of America is selling at a discount to its five-year average earnings multiple of 15 and its profit spreads consistently exceed peer averages. The company's shares have fallen 22% in 2010 amid mortgage regulatory scrutiny.

Dividend: Bank of America pays a quarterly dividend of one cent, converting to a paltry yield of 0.3%. Its dividend was cut from a high of 68 cents during the recession as the bank accepted federal TARP money.
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BAC $14.41 -2.40%
CVX $101.57 -1.70%
JPM $62.32 -2.30%
HPQ $11.70 -3.50%
MSFT $49.98 -1.20%


Chart of I:DJI
DOW 17,770.49 -120.67 -0.67%
S&P 500 2,063.10 -18.33 -0.88%
NASDAQ 4,772.3240 -45.27 -0.94%

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