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Bank of America Could Double Its Dividend Soon, Says Analyst

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If Mike Mayo is correct, Bank of America could soon be on the verge of increasing its dividend for only the second time since 2008. In a research report issued on Monday, Mayo predicts that Bank of America will nearly double the amount of capital that it's approved to return this year compared to 2015 levels. It returned $5.6 billion last year through dividends and buybacks, and it will return $10.3 billion this year, according to his estimates.

With respect to dividends in particular, Mayo sees Bank of America's annual payout increasing to $4.3 billion, up 95% from $2.2 billion last year. That compares to a median increase of 11% for the 23 banks in Mayo's analysis.

It remains to be seen whether Mayo's forecast comes to fruition. But either way, he's on the right track, as it isn't a question of if Bank of America will raise its dividend, but rather when it'll do so (and by how much). The $2.2 trillion bank's CEO, Brian Moynihan, made this point five years ago , saying that his objective is to eventually return the vast majority of capital generated by the bank every year to shareholders.

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John Maxfield owns shares of Bank of America. The Motley Fool recommends Bank of America. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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