Bank of America Corporation shares closed at $52.97 on January 19, according to market data. The stock's trailing and forward price-to-earnings ratios were reported as 13.90 and 12.15, respectively.
A bullish investment thesis from The Passive Income Portfolio's Substack was published recently. The thesis argues the bank's shares are trading at a discount. This discount is attributed to near-term concerns over net interest income, commercial real estate exposure, and unrealized losses on held-to-maturity securities.
Bank of America provides financial services globally to consumers, businesses, and governments. The thesis points to the bank's long-term capacity to generate distributable capital. This capacity is supported by a large, low-cost deposit base and diversified revenue streams from Global Banking and Merrill's wealth management platform.
The dividend record shows 12 consecutive years of increases. The payout ratio is approximately 32%. The thesis projects potential for sustainable long-term dividend growth of 6–8% annually. Combined with share buybacks, this could support a total return potential of about 9–10%, factoring in the current 2.1% yield.
The bank's balance sheet is described as robust, with a strong CET1 ratio and prudent liquidity metrics. Key risks noted include stricter Basel III requirements, adverse CCAR outcomes, and stress in the commercial real estate market. A CET1 ratio falling below 11% is identified as a potential risk to the dividend growth thesis.
Previously, a similar bullish thesis by Easy Trader in April 2025 highlighted the bank's diversified revenue and strong balance sheet. Bank of America's stock has appreciated by approximately 26.57% since that earlier coverage. The new thesis shares a similar view but emphasizes long-term distributable capital and dividend growth.
According to a database, 111 hedge fund portfolios held Bank of America stock at the end of the third quarter, down from 115 in the previous quarter. The bank is listed among the 30 Most Popular Stocks Among Hedge Funds.