This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bank of America: When Will It Raise the Dividend?

NEW YORK ( TheStreet) -- Bank of America (BAC - Get Report) has said it did not seek permission from the Federal Reserve to raise its dividend in 2012, but bulls are hoping for a surprise hike from the bank nonetheless.

Bank of America was embarrassed last year when it sought Fed approval for a dividend increase and didn't get it. The Fed is expected to rule on whether the 19 largest banks can increase their dividends at the end of next week, following the latest in now annual "stress tests" of bank balance sheets mandated by the Dodd-Frank financial reform law passed in 2010.

In an interview last week, Rochdale Securities analyst Dick Bove predicted Bank of America would raise its dividend by the second quarter of this year.

Stifel Nicolaus analyst Chris Mutascio also is looking for Bank of America to raise its dividend, according to a report he published Friday March 9. While Mutascio does not discuss Bank of America in the body of his report, he notes in a chart accompanying the report that he estimates the bank will pay out $900 million in dividends in 2012 versus a Wall Street consensus estimate of $577 million in dividend payments for Bank of America this year.

Mutascio's view is especially surprising since on the whole he is more bearish that his analyst counterparts at other institutions about the prospects for big dividend increases in the banking sector.

In explaining the rationale for his overall bearishness on dividends, Mutascio argues regulation post crisis has tended to be tougher than the market expects as a whole. He also believes that "the current macro environment will cause the Fed to err on the side of caution," and that "management teams realize this," and so will go into the stress tests "asking for less in earnings payouts than they might otherwise ask for in a more confident or less volatile economic back drop."

Asked why he was more bullish than the rest of the Street on Bank of America's dividend prospects, Mutascio replied via email. "We have a very minor increase in our model to $0.04 per [quarter] late in the year. I would not characterize our stance as bullish considering you are talking about very small numbers."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $14.56 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs