10 Best Dividend-Paying Stocks Under $50

4. Bank of America Corporation (NYSE:BAC)

Upside Potential as of August 16: 16.04%

Share Price as of the close of August 16: $39.34

With an upside potential of over 16%, BAC ranks fourth on our list of the best dividend stocks under $50. The American multinational financial services and investment banking company has been making uninterrupted dividend payments to shareholders for the past 26 years. The company announced an 8% hike in its quarterly dividend on July 24 which now takes its per-share dividend to $0.26. In the second quarter of 2024, it returned approximately $2 billion to shareholders through dividends. The stock offers a dividend yield of 2.64%, as of August 16.

Though Bank of America Corporation (NYSE:BAC) has surged by over 16% since the start of 2024, the stock declined by over 10% between July 17 to August 1. This decline followed the decision by its largest shareholder, Berkshire Hathaway, to sell its shares. In total, the hedge fund offloaded 90,422,124 shares, generating about $3.82 billion. Analysts suggest that the decision to sell BAC shares might be due to the bank’s sensitivity to interest rates. Although Bank of America previously gained from rising rates, the expected initiation of a rate-cutting cycle in September could lead to a quicker drop in its net interest income compared to other banks. Despite this, the company remains the second-largest holding in the hedge fund, a position it has consistently held for years, because this transaction is not reflected in the Q2 2024 13F filing, which only accounts for purchases and sales up to June 30.

This interest rate sensitivity was also highlighted by ClearBridge Investments in its Q1 2024 investor letter. Here is what the firm has to say:

“We added several new positions during the quarter. Our largest new addition was Bank of America Corporation (NYSE:BAC), one of the world’s leading financial institutions, serving some 66 million consumer and small business clients across the U.S. as well as large corporations, financial institutions and governments globally. We believe that the interest rate pressure that Bank of America faced in early 2023 has subsided, and risks surrounding deposit outflows have abated, which should allow the company to improve its book value and capital growth as well as benefit from a rebound of capital markets activity.”

The number of hedge funds tracked by Insider Monkey owning stakes in Bank of America Corporation (NYSE:BAC) jumped to 92 in Q2 2024, from 82 in the preceding quarter. These stakes are collectively valued at more than $48 billion.