23 years) and payout ratio.Our Dividend Safety Score measures a company’s ability to continue paying its current dividend and helps investors find the safest sources of income for their portfolios.Since April 2016, companies reducing their dividends had an average Dividend Safety Score of 16 at the time of their announcements.Dividend safety serves as the foundation for conservative income investing and stress-free retirement living.It seems like a pretty easy decision.As seen below, Kinder Morgan, ConocoPhillips, BHP Billiton, National Oilwell Varco, Noble Energy, Devon Energy, CONSOL Energy, and Anadarko Petroleum all scored in the bottom 10-20% for Dividend Safety and had an average score of 5 at the time of their dividend cut announcements.ValueWalk.com is a highly regarded, non-partisan site – the website provides unique coverage on hedge funds, large asset managers, and value investing.
The following table lists all stocks we have analyzed using our dividend safety rating system. Which combined with the already strong increase in long-term rates (as represented by rising 10 and 30 year US Treasury rates), could spell a bonanza for Bank Of America.We analyze 25+ years of dividend data and 10+ years of fundamental data to understand the safety and growth prospects of a dividend.In fact, UBS (UBS) analyst Brennan Hawken recently stated after its most recent earnings results that Bank of America was fast becoming “the most conservative large bank.” While Mr. Hawken believes that this pivot to ultra conservative banking could leave a lot of profit on the table, personally as a long-term dividend growth investors I applaud Bank Of America for attempting to mimic Wells Fargo (WFC) and JPMorgan Chase (JPM) in growing long-term shareholder value the right way – slow and steady.When it comes to all the metrics that matter for long-term investors, including EPS growth, the dividend payout ratio, the dividend itself, the efficiency ratio (what proportion of revenue go to operating the bank), the Tier 1 capital ratio, and net interest margin, Bank of America is making good progress (see table below).This kind of extreme profit swings, combined with constant regulatory risks (such as calls to break up big banks), as well as having to OK dividends with regulators, means that banking dividend safety isn’t as cut and dry as merely looking at a bank’s payout ratio.Our Dividend Growth Score answers the question, “How fast is the dividend likely to grow?” It considers many of the same fundamental factors as the Safety Score but places more weight on growth-centric metrics like sales and earnings growth and payout ratios.
Such are stocks carrying high-yield and risk of dividend cuts or even bankruptcy. In fact, since 2010, under Moynihan’s leadership the ratio has risen 55.2% from 7.6% (very weak balance sheet) to 11.8%.Bank of America has a Dividend Safety Score of 49, suggesting that the company’s dividend is reasonably secure and about as safe as the average dividend stock in the market.