Summary
- Bank of America pays a below-average dividend, but investors should expect for this to change in the near future.
- There are plenty of reasons to own BAC shares today, but, if you ask me, the bank's dividend growth potential is #1 on that list.
- I am long Bank of America, and I plan to stay long the stock.
- This idea was discussed in more depth with members of my private investing community, Going Long With W.G.. Start your free trial today »
Bank of America's (BAC) stock has been a major disappoint over the last year, as poor sentiment for the financials sector has outweighed what looks to be attractive valuations for the large U.S. banks.
Data by YChartsI have been long BofA for an extended period of time, but, in my opinion, BAC shares currently look more attractive than they have in years. This large bank has several significant catalysts in place that have the potential to lead to outsized gains over the next 18-24 months, but I believe that BofA's dividend growth story is the reason to own BAC shares today.
The Reason To Stay Long, An Income Play That No One Is Talking About
There are plenty of reasons to like BAC shares, but, in my opinion, the bank's dividend growth prospects are on the top of that list. Pundits consistently complain about BofA's below-average dividend yield of ~2.10%, and rightfully so, but let's also not forget that the payout has grown significantly over the last five years.
Source: Seeking Alpha
