April 21, 2025 a 03:31 pm
BAC: Dividend Analysis - Bank of America Corporation
Bank of America Corporation (BAC) presents a steady dividend profile characterized by a modest yield, exemplified by its long-standing dividend history spanning four decades. The firm's prudent payout ratios and consistent dividend growth indicate a reliable income source for investors. However, the challenges in free cash flow underscore the necessity for potential investors to remain vigilant. Overall, BAC's dividends align well with investors seeking a combination of steady income and moderate capital appreciation.
📊 Overview
The analysis of Bank of America reveals a predominant position in the financial sector with a dedicated dividend history. This commitment extends to a current yield of 2.46%, reflecting a consistent approach to shareholder returns.
| Sector | Dividend yield | Current dividend per share | Dividend history | Last cut or suspension |
|---|---|---|---|---|
| Financial | 2.46 % | 1.23 USD | 40 years | None |
🗣️ Dividend History
Bank of America has upheld a robust dividend history, substantiated by its steady and predictable distribution over the past decades. This track record is crucial for evaluating the company's reliability and its capacity to deliver sustained dividends.
| Year | Dividend per Share |
|---|---|
| 2025 | 0.26 |
| 2024 | 1.00 |
| 2023 | 0.92 |
| 2022 | 0.86 |
| 2021 | 0.78 |
📈 Dividend Growth
Assessing the growth in dividends over the past years is crucial for gauging the firm's forward momentum. Positive dividend growth portrays a company's thriving financial health and commitment to increasing shareholder value.
| Time | Growth |
|---|---|
| 3 years | 8.63 % |
| 5 years | 8.67 % |
The average dividend growth is 8.67% over 5 years. This shows moderate but steady dividend growth.
✅ Payout Ratio
Payout ratios help investors assess whether a company's earnings and cash flows efficiently support its dividends. A moderate payout ratio signals a healthy balance, ensuring dividend sustainability even in less favorable periods.
| Key figure | Ratio |
|---|---|
| EPS-based | 35.03 % |
| Free cash flow-based | -105.44 % |
The EPS-based payout ratio of 35.03% is within a healthy range, demonstrating sufficient earnings coverage. In contrast, a free cash flow-based payout ratio of -105.44% indicates potential strain on cash reserves, warranting cautious observation.
✅ Cashflow & Capital Efficiency
The evaluation of cash flow and capital efficiency highlights the company’s operational and financial robustness, essential for sustaining and growing dividends.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | -2.59% | 16.64% | -2.35% |
| Earnings Yield | 7.98% | 9.81% | 10.24% |
| CAPEX to Operating Cash Flow | 0% | 0% | 0% |
| Stock-based Compensation to Revenue | 3.37% | 2.98% | 3.01% |
| Free Cash Flow / Operating Cash Flow Ratio | 100% | 100% | 100% |
The metrics highlight varying cash flow resilience across years, with notable fluctuations in free cash flow yield which merits investor attention regarding sustainability.
⚠️ Balance Sheet & Leverage Analysis
The balance sheet and leverage ratios offer a window into the company’s financial health, evaluating stability, liquidity, and debt capacity.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 2.23 | 2.12 | 1.82 |
| Debt-to-Assets | 20.19% | 19.44% | 16.34% |
| Debt-to-Capital | 69.02% | 67.95% | 64.60% |
| Net Debt to EBITDA | 12.59 | 9.10 | 7.92 |
| Current Ratio | 0.40 | 0.36 | 0.29 |
| Quick Ratio | 0.40 | 0.36 | 0.29 |
| Financial Leverage | 11.04 | 10.90 | 11.17 |
High leverage ratios signal increased risk, though partly offset by improving debt-to-equity metrics over recent years, suggesting managed financial risks.
📈 Fundamental Strength & Profitability
Fundamental analysis, encompassing profitability and efficiency measures, provides insight into the company’s operational soundness and strategic standing.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 9.18% | 9.09% | 10.08% |
| Return on Assets | 0.83% | 0.83% | 0.90% |
| Net Margin | 26.63% | 26.89% | 28.99% |
| EBIT Margin | 28.71% | 28.75% | 32.62% |
| EBITDA Margin | 28.71% | 30.84% | 34.70% |
| Gross Margin | 100% | 100% | 100% |
| R&D to Revenue | 0% | 0% | 0% |
Strong margins and relative ROE stability emphasize the company's ability to maintain profitability, though absence of R&D investment underscores potential innovation challenges.
📉 Price Development
🏆 Dividend Scoring System
| Criteria | Score | |
|---|---|---|
| Dividend yield | 3 | |
| Dividend Stability | 4 | |
| Dividend growth | 4 | |
| Payout ratio | 3 | |
| Financial stability | 3 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 2 | |
| Balance Sheet Quality | 3 |
Total Score: 27/40
🏁 Rating
Overall, Bank of America Corporation offers a respectable dividend profile with consistent payouts and promising growth prospects. However, caution is advised due to variable cash flows and leverage metrics. Prospective investors should consider these factors when evaluating BAC's dividend dependability within their portfolio context.