Do you think one should buy shares in your bank as part of your own investment portfolio? Bank of America is the bank I use. Lets have a look at it not from the point of view of a customer, but from the point of view of a potential investor. First of all, lets examine its activity. Bank of America is one of the largest financial institutions all over the world that renders services to individual clients, small and middle market companies as well as large corporations. It provides with a range of services such as banking, asset management, investing, and other financial and risk-management products. Investors Fact Book dated August 2006 provides us with important information about financial activity and banks position in the market.
For example, it claims that Bank of America occupies the second position ($10,461) in Top 10 U.S. Banking companies by YTD earnings $ in millions. What concerns Top 10 U.S. Banking companies (in equity @ 6/30/2006) it occupies the first place with its $127,841. It has the second place in Top 10 U.S. Banking companies (in assets @ 6/30/2006) with $1,445 and the second place in market capitalization @ 6/30/2006 with its $218 billion.
Bank of America can be considered a perfect opportunity for investors because the bank has a high stock market value. It has faster earning growth compared to many other banks. Besides, Bank of America pays a higher dividend yield than many other competitors. For example, if to compare Bank of America with Citigroup, taking into account earnings growth, the net income of Bank of America has grown an average of 17% over the last five years seven percentage points faster than Citigroups 10% (Peter, 2006).
The Term Paper on The Investment Industry Banks Firms Market
The Investment Industry The investment industry is composed of a wide variety of firms. The main players include independent full line brokerage firms, investment bank subsidiaries of chartered banks, and discount brokers. Independent full line brokerage firms offer a wide range of services, including underwriting, trading of stocks, advice and research. In essence, the full service brokerage ...
Comparing the dividend yield, the dividend yield of Bank of America of 4.11% is 21 basis points (100 basis points = 1%) greater than Citigroups 3.90% (Peter, 2006).
Since July 26, 2006, the Bank of America Board of Directors increased the quarterly cash dividend paid on common stock by 12 percent from $0.50 to $0.56 per share. The details can be easily seen at tables 3, 4 and 5.
For example, Table 3 shows us that diluted earnings per share have grown from $1.98% in 1998 to $4.11 in 2005. Table 4 explains that dividends per share and payout ratio also increased (dividends per share of $0.80 in 1998 compared to $1.90 in 2005; payout ratio of 39.9% in 1998 compared to 46.6% in 2005).
What concerns its financial activity we can easily see (fm. Table 1) that Bank of Americas net interest income reached $17,406 (2006) compared to $15,142 (2005).
Total revenue for 2006 is 35,905 compared to 28,130 in 2005. Bank of America also derived much benefit from various acquisitions (i.e. FleetBoston Financial in 2004, credit card issuer MBNA Corporation in January, and many others).
According to information from Bank of Americas website, mean future 5 year growth rate (the rate that equals the average projected growth rate for corporate earnings per share) is 9 (Earning estimates, 2007).
Mean recommendation is 2.3 . According to Earning Estimates, mean recommendation is the average rating on a stock by the analyst community and is rated on a 1 to 5 scale, where 1 is equivalent to a buy rating, 3 a hold rating, and 5 a sell rating. Wikipedia Web site claims that Global Wealth and Investment Management is among the 10 largest U.S. wealth managers (ranked by private banking assets under management in accounts of $1 million or more as of June 30, 2005).
The Term Paper on Cdpd In Latin America
A key success factor for business development in Latin American Seven years ago cell phones technologies arrived to the Latin American countries and brought wireless voice communications, with that the develop of a new value-added service like CDPD emerge bringing wireless data transfer. Due to this technology business communities around Latin America had started to perform their productive ...
It has five primary lines of businesses such as Premier Banking & Investments (including Banc of America Investment Services, Inc.), The Private Bank, Family Wealth Advisors, Columbia Management, and Banc of America Specialist. Taking into account all information and financials, we come to conclusion that Bank of America is worth owning shares in.
Bibliography Earning Estimates. (2007, January 6).
Retrieved January 6, 2007, from Bank of America: http://investor.bankofamerica.com/phoenix.zhtml?c= 71595&p=irol-estimates Investor Fact Book First half 2006. (n.d.).
Retrieved January 6, 2007, from http://library.corporate-ir.net/library/71/715/715 95/items/210863/9_12_06factbookpages.pdf Overview. (2007, January 6).
Retrieved January 6, 2007, from Bank of America : http://investor.bankofamerica.com/phoenix.zhtml?c= 71595&p=irol-irhome Peter, C.
(2006, November 29).
Bank of America overtakes Citigroup. Retrieved January 6, 2007, from Blogging Stocks: http://www.bloggingstocks.com/2006/11/29/bank-of-a merica-overtakes-citigroup/ Table 2 Table 3 Table 4 Table 5.
