Bank of America Dividend Cut

I am as disappointed to see Bank of America’s dividend cut as anyone. The stock is one of the only financial positions in the Dividend Superstars portfolio, and I thought the company would honor its promise to keep its payout at least stable through the current crisis.

I was wrong. Circumstances — which sure include the pending MER acquisition and the ongoing credit crunch — forced a 50% reduction in the company’s dividend.

For some perspective, this marks the first year since 1978 that BAC didn’t INCREASE its payment.

The company was also the second-largest payer in the S&P 500. After the cut, it remains the 5th largest payer.

I don’t think it’s a good idea to sell the shares into weakness on the news. But I will be providing a complete update on the company, and what I recommend doing given the latest news, in the next issue of Dividend Superstars.

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