Bank Of America Corp (BAC): A Dividend Growth Stock That Benefits From Rising Interest Rates

Conclusion

While I am very impressed with Bank of America’s turnaround under Brian Moynihan, the fact remains that the bank is still a high-risk stock if only because we have yet to see how the bank’s financials hold up under an economic downturn.

Management’s emphasis on solid conservative, core banking principles, a more diversified business model, and slow but steady growth make Bank of America a potentially alluring dividend growth stock as long as you understand the risks involved.

For long-term, risk tolerant investors, Bank of America Corp (NYSE:BAC) represents an intriguing deep value, dividend growth investment; especially now if interest rates finally be headed higher. Just remember that if you do decide to buy a stake in this bank turnaround story, that you do so as part of a well-diversified dividend portfolio (3).

I personally don’t have the risk tolerance to hold a company such as Bank of America and will stick to proven blue chips, such as Dividend Aristocrats, that fall within my circle of competence. Bank stocks are complex investments, and their high financial leverage is a powerful force that cuts both ways.

Disclosure: None

Additional Links:

(1) http://www.relbanks.com/worlds-top-banks/assets

(2) http://www.simplysafedividends.com/top-10-financial-ratios-dividend-investing/

(3) http://www.simplysafedividends.com/build-dividend-portfolio/