Bank of America boosts dividend 14% to $0.32 as buybacks continue

Bank of America raised its quarterly dividend 14% to $0.32 a share, citing strong earnings and confidence in long-term growth.

"The increase in our dividend reflects the strength of our earnings, the power of our franchise and our confidence in Bank of America's ability to drive long-term growth and create value for shareholders," Chair and Chief Executive Officer Brian Moynihan said.

The dividend, payable Sept. 25 to holders of record Sept. 4, follows a second quarter where the bank earned $1.21 a share, beating the $1.12 consensus estimate by 8%. Earnings rose 34% from a year earlier, driven by net interest income growth and a record trading franchise.

The increase brings the annual payout to $1.28 a share, up from $1.12. BAC returned $8 billion to shareholders in the second quarter alone, including $13.2 billion in buybacks and $4 billion in dividends during the first half. The board's $40 billion buyback authorization still has about $17 billion remaining.

The dividend hike comes as Moynihan prepares to retire in November after eight years as CEO, with Greg Ward named as his successor. The bank's CET1 ratio stood at 13.8% at June, up from 12.8% at March, providing ample room for continued capital returns.

BAC shares trade at about 19.2 times forward earnings, above the long-run average of 14 times, according to UBS. The stock has returned 34% over the past year, compared with the S&P 500's 18% gain.

The dividend increase signals management's confidence in earnings momentum as the bank navigates a rising rate environment. Investors will watch the third-quarter earnings report in October for signs of net interest income acceleration after Moynihan guided NII growth of 6% to 8% for the full year.

This article is for informational purposes only and does not constitute investment advice.