July 10, 2017 admin

Shrinking the float

BAC massive buyback provides price support and downside protection, continuing for years. It’s a great read.

The Federal Reserve unconditionally approved Bank of America’s 2017 capital return plan as a part of its annual stress test for the country’s biggest banks (see Fed Clears Capital Plans Of All U.S. Banks Subject To Stress Tests For The First Time In Seven Years). Following the approval, the diversified banking giant announced plans to hike its quarterly dividends by 60% – from 7.5 cents now to 12 cents a share beginning Q3 2017. The bank will also repurchase $12 billion worth of its common shares over the next twelve months, and has also set aside an additional $0.9 billion to repurchase shares to offset an increase in shares from its stock-based employee compensation plan.

Bank of America’s capital return figures for each year since 2005Given the bank’s roughly 9.95 billion outstanding shares, the 2017 capital plan entails a payout of almost $17 billion to investors over Q3 2017 – Q2 2018. This is more than double the $8 billion figure announced by Bank of America as a part of its 2016 capital plan. We are currently in the process of updating our price estimate for Bank of America’s stock in light of its better-than-expected capital return plan.

See entire article in Forbes by clicking here.

 

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