New Trade for November 22nd, 2021

Stocks ticked higher to kick off the holiday-shortened week.  The week ahead will be packed with more retail and tech earnings, as well as some key economic data ahead of Thanksgiving and Black Friday.

On Wednesday, the University of Michigan will release its final reading of its Consumer Sentiment Index (MCSI) for November.  We’ll also get an update on personal spending and income in the U.S. for October.  

The next chair of the Federal Reserve could be decided this week.  President Biden is expected to announce his pick for the next Federal Reserve Chief in the coming days, with current chairman Jerome Powell and Governor Lael Brainard considered to be the most probable candidates. 

The stock featured in today’s trade alert will likely respond well to the tightening of Fed policies which are inevitable.  Our long-term minded readers will appreciate this quality stock for its extensive history of rewarding investors with a steady payout. 

Bank of America Corporation (BAC) provides banking and financial products and services for individual consumers, institutional investors, large corporations, and governments worldwide. It operates through the following segments: consumer banking; global wealth & investment management; global banking; and global market segments.

Thanks to its global investment banking and financial services portfolio, most are familiar with this financial titan.  In the U.S., BAC currently operates via 4,300 retail financial centers, 17,000 ATMs, and digitally serves 41 million active users. Furthermore, the company is also present in 34 other countries across the globe.

After more than doubling since its pandemic-era low, let’s take a look at the factors that could boost BAC going forward.  For one thing, the Fed has signaled two interest rate hikes as soon as late 2023, which should help BAC increase its interest income down the road.  Zooming in a little closer, according to Globe Newswire, the global financial services market is expected to grow at a 9.9% CAGR to hit $22.5 trillion this year.    

Furthermore, BAC’s shift in focus towards the digital space seems to be benefiting the company.  Earlier this month, BAC reported that its Bank of America app facilitates 85% of deposit transactions on its network now.  In the second quarter, this accounts for nearly 48 million checks that BAC customers deposited.

Jim Cramer recently cited Bank of America as one of the potential beneficiaries of rising rates.  He thinks that BAC will “make a killing if the Federal Reserve is forced to tighten.”

If you need another reason, consider BAC’s uninterrupted 21-year history of rewarding investors through dividends.  The company recently raised its quarterly dividend to $0.21 per share, up 16.7% from the previous quarter.