The yield isn’t tremendous, but its dividends are paid — and raised — like clockwork.
Are you looking for a particular amount of recurring dividend income? Maybe you’ve got ongoing bills to pay from your retirement savings? Whatever the case, Bank of America (BAC -0.05%) is a compelling way to generate reliable cash flow from your investments.
Bank of America stock’s dividend-paying potential
BofA stock currently boasts a dividend yield of just under 2.5%. If you needed $1,000 worth of annual dividend income, a $40,816 investment in Bank of America right now would produce this amount of cash in a year. If you need that amount of income on a quarterly or monthly basis, the required investment is ratcheted up to $163,265 and nearly $490,000, respectively.
That’s a pretty large chunk of change for what’s not a great deal of dividend income. There are certainly higher-yielding dividend stocks out there. What BofA lacks in total yield, however, it makes up for in reliable dividend growth and capital appreciation. Ever since finally and fully shrugging off the effect of 2008’s subprime mortgage meltdown in 2016, the U.S.’s second-biggest bank has been steadily raising its per-share dividend payment. It’s grown at an annualized pace of 25% since that time.
BAC data by YCharts
The stock itself has a strong performance track record as well, rallying from late 2011’s low of $4.92 per share to its present price near $39.
BofA is a reliable, low-maintenance dividend payer
There are prospective risks worth keeping in mind should you decide to step into a stake in Bank of America. Chief among them is the prospect of another financial crisis like the one we saw in 2008, which up-ended BofA stock in addition to forcing a prolonged reduction of its dividend. Although there are now safeguards in place to prevent such a calamity from taking shape again, never say never — most problems are inherently unpredictable. Bank of America isn’t immune to them.
Barring this sort of generational event, however, Bank of America is one of the more reliable dividend-paying stocks you can rely on to generate consistent income.
Bank of America is an advertising partner of The Ascent, a Motley Fool company. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America. The Motley Fool has a disclosure policy.