Bank of America (BAC) Soars 3% on Dividend Stock Advice Amid Tariff Uncertainty

On April 23, 2025, Bank of America's stock rose by 3% in pre-market trading, reflecting a positive sentiment among investors.

Bank of America has advised investors to focus on high-quality, dividend-paying stocks as a hedge against market volatility and policy uncertainty. This recommendation comes amid a tumultuous market environment, exacerbated by President Donald Trump's announcement of "reciprocal tariffs" earlier this month. Despite a market rebound on Tuesday following a significant drop on Monday, volatility is expected to remain high.

Savita Subramanian, Bank of America's head of U.S. equity and quantitative strategy, highlighted in a recent report that policy uncertainty is driving market volatility. She also noted that Trump's new tariffs could increase inflation risks. Subramanian suggested that high-quality stocks with inflation protection are the best defense against market volatility and could provide excess returns.

To identify suitable stocks, Bank of America analyzed the Russell 3000 index, excluding financial and real estate sectors due to their unique financial metrics. The bank selected companies with stable earnings and dividend growth over the past decade, high return on equity, and low net debt. These stocks also have higher expected dividend yields compared to the index average and are expected to maintain or increase their dividends. Additionally, the companies' free cash flow over the past 12 months should exceed their expected dividends.