It appears like in the upcoming four days, Bank of America Corporation (NYSE:BAC) will be ex-dividend. The record date, which is the day on which a firm decides which shareholders are entitled to receive a dividend, is usually one business day prior to the ex-dividend date. It is crucial to be aware of the ex-dividend date since any stock purchases done on or after this day may result in a delayed settlement that is not shown on the record date. Consequently, the dividend, which is scheduled to be paid on December 29, will not be given to Bank of America stock buyers who buy the shares on or after November 30.
Following a dividend payment of US$0.96 to shareholders last year, the corporation will pay out US$0.24 per share in dividends this year. Based on its current stock price of $29.73, Bank of America has a trailing yield of almost 3.2% when looking at the previous 12 months of payouts. For many owners, dividends represent a significant source of income; yet, the company’s ability to continue paying dividends depends on its overall health. For this reason, we should always make sure the business is expanding and that the dividend payments seem sustainable.
Usually, the company’s earnings are used to pay dividends. A dividend may not be sustainable if a corporation pays out more in dividends than it made in profit. Last year, Bank of America distributed a cosy 25% of its profits.
Generally speaking, dividends from companies with lower dividend payments than earnings are more sustainable. The firm has more wriggle room before it might be obliged to reduce the dividend the lower the payout ratio.
The best dividend stocks are often those that have steadily increasing earnings per share since it is typically simpler for them to increase dividends per share. Should profits decline significantly, the business could have to reduce its dividend. We’re happy to learn that Bank of America’s profits per share has increased by 18% annually over the last five years because of this.
Analysing a company’s past rate of dividend increase is another important technique to assess its dividend prospects. Bank of America has raised its dividend at an average rate of almost 37% annually over the last ten years. It’s encouraging to note that dividends and per-share profits have both increased quickly recently.
Is it better to purchase Bank of America for the impending dividend? Businesses that are expanding quickly and paying out a small percentage of earnings usually retain their profits to put back into the company. Over time, this method may significantly increase value for shareholders—so long as it is implemented without issuing an excessive number of new shares. We believe that this is a really appealing combination and would like to look at Bank of America more.