Blue-chip dividend stock pays Warren Buffett $580M in annual dividends
Warren Buffett doesn’t chase a high dividend yield. Instead, he buys quality businesses, holds them for decades, and lets the cash roll in.
Bank of America is a perfect example of that strategy playing out in real time.
Berkshire Hathaway owns517.3 million shares of Bank of America (BAC). At the current annualized dividend of $1.12 per share, that’s roughly $580 million in dividend income every single year.
For most investors, BAC won’t generate that kind of income. But the core idea of owning a financially sound bank that consistently rewards shareholders, is one any dividend investor can act on.
Why dividends matter more than people think
Before diving into BAC’s numbers, it’s worth stepping back.
Dividend-focused investments provide a steady income stream for investors seeking regular cash flow, and they tend to identify value-oriented companies through consistent payout strategies.
That’s especially valuable during volatile stretches in the market, when share prices swing wildly, but dividend checks still land on schedule.
Morningstar notes that targeting stocks with 10 years of dividend growth is a strict hurdle that provides a big advantage as it filters out companies that can’t sustain payouts through tough cycles.
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BAC stock has now grown its dividend for five consecutive years. However, banks were forced to pause dividend hikes and boost liquidity during the COVID-19 pandemic.
Here’s a snapshot of BAC’s dividend profile:
The payout ratio, at around 25%, is key. It means BAC is paying out roughly a quarter of what it earns, leaving plenty of room to keep raising the dividend even if earnings dip temporarily.
A blowout Q1 makes the bull case stronger
BAC just reported first-quarter 2026 results, and they were hard to argue with.
CEO Brian Moynihan put it plainly on the earnings call: every single business segment grew revenue, grew earnings, grew deposits, and grew loans in the quarter.
Moynihan stated:
“This performance was driven by balanced results across our businesses, continued operating leverage, solid client activity and stable to modestly improved asset quality.”
That kind of broad-based momentum is what dividend investors want to see as it signals the payout isn’t depending on one lucky quarter in one corner of the business.
Related: Bank of America goes all in on controversial tech
Operating leverage came in at 290 basis points, and the efficiency ratio improved to 61%. Return on tangible common equity hit 16%.
These metrics indicate that the company is consistently improving profit margins.
In Q1, the dividend stock paid out $2 billion in common dividends and bought back $7.2 billion worth of stock. Combined, that’s $9.2 billion returned to shareholders in a single quarter.
Share buybacks matter because they reduce the share count over time. Fewer shares outstanding mean each remaining share is worth a larger slice of earnings and, eventually, a larger slice of future dividends.
The CET1 (common equity tier 1) capital ratio sits at 11.2%, well above regulatory requirements.
Moynihan noted on the call that the long-term target is to operate with roughly a 50-basis-point cushion above the regulatory minimum.
Wall Street is bullish on BAC stock
Despite BAC’s strong run, analysts aren’t walking away from the stock. Based on analysis of 36 Wall Street analysts, BAC stock has a median price target of $61.00 and an overall analyst rating of “Strong Buy”.
Analysts forecast BAC to expand adjusted earnings per share from $3.81 in 2025 to $6.84 in 2030.
If the blue-chip bank stock is priced at 11.5x forward earnings, which is in line with its 10-year average, it could gain 50% from current levels within the next four years.
If we adjust for its dividends, cumulative returns could surpass 60%.
Consumer resilience backs the dividend stock case
One of the more interesting parts of Moynihan’s commentary wasn’t about NII or capital ratios; it was about what Bank of America’s massive customer base is doing with their money.
Moynihan pointed out that BAC ended Q1 with a record 38.5 million consumer checking accounts. More than 90% of those customers use Bank of America as their primary bank. That stickiness is what keeps deposits and net interest income flowing.
BofA’s AI efficiency edge
On the Q1 call, Moynihan highlighted that the bank has 90 AI installations running across the company.
The trend is a familiar one at BAC — headcount is lower today than before the Merrill Lynch and Countrywide acquisitions in 2008, even as the business has grown dramatically. Technology and AI are simply accelerating what has been a multi-decade productivity story.
That matters for dividend investors because lower unit costs and expanding operating leverage mean more earnings available for payouts and buybacks.
Is the Warren Buffett stock a good buy?
Bank of America isn’t going to double overnight. What it is supposed to do is grow steadily, manage risk conservatively, raise its dividend every year, and buy back stock when it trades at a reasonable price.
Buffett figured that out years ago. His $580 million annual dividend haul from BAC is the product of patience, a simple thesis, and a stock that keeps delivering.
For income-focused investors, BAC checks the right boxes: a sustainable payout ratio, consistent dividend growth, a management team focused on operating leverage, and a balance sheet that can weather rough economic patches.
That’s what a quality dividend stock looks like.
Related: 176-year-old bank stock pays Warren Buffett $576M in annual dividends
This story was originally published by TheStreet on Apr 27, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.