Sivy on Bank of America - Good Dividend

Written by The Dividend Guy on December 15, 2006

As you may already know, I enjoy Michael Sivy’s column over at Money.com. He has a long term view of the stock market and tends to focus on the bug, dividend increasing companies that I favor.

What Sivy emphasizes about the stock today is the low P/E ratio and the high dividend yield:

The bottom line is that investors buying Bank of America today not only get a very cheap stock. The price is likely to be supported by the current low 10.7 P/E ratio, based on estimated earnings for 2007, and also by the fat 4.3 percent yield.

I would have to agree. According to my data, the average P/E ratio for the stock over the last 10 years has been 12.2, which puts the current P/E of ~10 lower, and therefore cheaper on a historical basis. In addition, the overall average dividend yield has been `3.6%. The current yield of ~4.3% suggests the stock is somewhat cheaper by historical factors. If an investor is comfortable with the fundamentals going forward, then this stock may be worth a look - escpecially with a nice fat dividend yield like this!


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1 Comment so far

  1. mark December 19, 2006 3:18 pm

    I’m glad other still think Bank of America is a good buy / undervalued. It’s my single largest holding, and I’ve been buying a little more BAC stock every month with a DRiP for a few years now.

    I believe when I first bought some shares in 1998, it was also yielding around 4%. Adjusted for its one split, BAC has almost tripled their dividend since then. Nowhere have I seen the effects of reinvesting and compounding more dramatically in my portfolio than in BAC.

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