The reason no one's buying BAC is because everyone's buying FRE with its "140% dividend" or FNM with its "28% dividend". NOT!!! LOL
Question: Dividend's been cut once. Do you think it can't happen again? Question: What happens to the stock price if the dividend is cut again? Question: What happens if due to some future event or further analysis, an idea takes hold that BAC is more like C than previously thought? Question: Institutional investors, the ones that move a stock, prefer to buy when a stock's PEG ratio is below 1.0 In this market, it might be an even stricter rule--well BELOW 1.0. What would be the catalyst for investors to buy this stock at a PEG ratio of 1.39?
They let them use TARP funds to pay bonuses, retention packages and buy other banks. So they'll let them pay exorbitant dividends as well in order to prop up the stock price. Remember, this is the Federal Govt and they knoweth not what they do.