Bank of America needs to show a steady stream of profit before satisfying demands for a higher dividend, CEO Brian Moynihan said.
'The No. 1 issue is to get the recurring earnings stream back where it should be', and then address the mix of dividends and stock buybacks, Moynihan said Wednesday at the bank's annual shareholders meeting.
Bloomberg reports that Bank of America, swamped by costs tied to defective mortgages, has posted only four quarterly profit increases since Moynihan became CEO in 2010. Investors pressed him on when the dividend would be increased from its current 1% per quarter.
The payout was reduced to that amount during the financial crisis when the bank obtained a $45bn U.S. bailout, which has been repaid.
'They’ve probably got 20 cents per quarter in earnings that’s recurring right now, and that’s not enough', said Nancy Bush, an analyst at SNL Financial. 'He has to get to a point where interest rates normalize and you get more certainty with mortgages before he declares a significant dividend'.
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