After being forced to slash its dividend in the financial crisis of 2008 -- along with most of the banking industry -- Bank of America's (BAC 1.32%) management team has done an excellent job of establishing the mega-bank as an excellent income stock.
Not only does Bank of America pay an above-average dividend yield of about 2.4% as of this writing, but it has done a fantastic job of growing the dividend. Since 2018, Bank of America has increased its dividend five times, and its quarterly payout has doubled in that period.
Want $1,000 in dividend income?
Let's say that you want $1,000 in annual dividend income from Bank of America stock. Using the current dividend yield (2.42% as of this writing), a quick calculation shows that you would need to invest about $41,322 in Bank of America stock to get it.
Of course, if your income need is higher or lower, you can multiply this figure accordingly. For example, if you want $5,000 in dividend income from Bank of America, you'd need to invest five times this amount.
A combination of growth and income
To be clear, if your main investment goal is to maximize income from your portfolio, there are likely better choices than Bank of America. There are some rock-solid stocks that have dividend yields that are double that (or more) of Bank of America.
Having said that, Bank of America is a great way to get a solid dividend that should grow over time, as well as plenty of long-term upside potential. It has a relatively cheap valuation compared with its peers, and it could be a big beneficiary as interest rates normalize and economic fears (hopefully) start to fade.
