I recently bought 211 shares of BAC at $14.90 and $14.63. The market react to the weak labor market posed a great opportunity to average down on my BAC position. As stated at the beginning of the year, I’m long with the financial sector. The FED has kept the interest rate down for so long hoping to boost the economy but it really hasn’t been working as well as they thought. Everything has its cycle. I believe the time is this year to buy into the cash hoard financial sectors.
BAC is not a dividend aristocrat, due to the financial meltdown 2009, but prior to that it was paying $1/share, just like WFC, I have no doubt that they will eventually raise to the previous level. Aside from a great balance sheet, earning $0.38/share per quarter, right now it’s only paying $0.05/share 1/7 of earning. That poses a high probability for the chance the company will prop up the dividend payout.
Financial sectors are heavily regulated. People would view it as it deter growth. I beg the differ. It’s just means that big brother is watching. The FED and the SEC are making sure banks don’t make the same HUGE mistakes prior to the 2009 financial meltdown. That bring more confident to shareholders.
Financial sectors have exposure to oil stocks – unlike WFC which rely 15% of loaning business financing sector, BAC doesn’t have oil exposure, so it hasn’t been affected by the low commodity price.