NEW YORK (
Bank of America
is selling off assets and issuing new shares, but analysts are still looking for the bank to spend some $1 billion on dividend payouts in 2012.
A report from Deutsche Bank Tuesday projects Bank of America will spend $939 million on dividends next year, or 15% of earnings, resulting in a yield of 1.4%. Deutsche Bank also expects Bank of America to issue a whopping $15 billion in common stock, roughly one third of its current market cap. Deutsche Bank analyst Matt O'Connor has a "hold" on Deutsche Bank, citing its "low" capital under new industry rules known as Basel 3 as one of the things that "keeps us on the sidelines."
O'Connor is looking for Bank of America to have a Basel 3 Tier 1 common ratio of 8% by the end of 2012, the lowest ratio among the 18 banks for which he published projections on Tuesday.
However, by the end of 2013, O'Connor is projecting Bank of America will have a higher Basel 3 Tier 1 common ratio than either
While none of the banks O'Connor covers will have a dividend yield of more than 3.9% in either 2011 or 2012, O'Connor is expecting big things in the way of buybacks from a few banks.
O'Connor is looking for returns as high as 10.4% from,
First Horizon National Corp.
, including dividends and buybacks in 2012, according to his report. The next-highest returns (encompassing dividends and buybacks) would be 6.6% at
, 6.4$ at U.S. Bancorp, and 6.2% at
, according to O'Connor's report. O'Connor is also looking for
to spend $1.2 billion on dividends next year.
Deutsche Bank spokespeople confirmed the assertions in O'Connor's report, but said he wasn't available for comment.
Stifel Nicolaus analyst Chris Mutascio expects slightly higher dividend-related payouts from Bank of America in 2012 of $1.2 billion. Mutascio sees the bank upping its dividend from its current penny per share to five cents per share starting in the third quarter. The bank will need regulatory approval for any dividend increase. A bank spokesman declined to comment. Mutascio does not expect Bank of America to issue any common stock in 2012.
While O'Connor sees all the banks he covers issuing some type of dividend in 2012, he sees only about half of them buying back shares., including
( HUNB), among others.
Written by Dan Freed in New York
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