BAC vs TROW: Dividend Comparison
Dividend data as of
Bank Of America Corp /De/ (BAC) and Price T Rowe Group Inc (TROW) are both in the Financials sector, making them natural rivals for dividend investors. BAC edges ahead on yield at 1.95% versus TROW's 1.31%. For dividend growth, BAC leads with a 5-year CAGR of 8.5% versus TROW's -8.7%. Both stocks carry a "Safe" dividend safety rating. BAC is a Dividend Contender with 12 years of consecutive increases.
Verdict
Yield Analysis
BAC yields 0.64% more than TROW. In dollar terms, BAC pays $1.08/share vs TROW's $1.27/share annually.
Dividend Growth
BAC: Dividend growth has been steady, with a 3-year CAGR of 8.3% and a 5-year CAGR of 8.5% (10-year: 17.6%).
TROW: Dividend growth is accelerating — the 3-year CAGR of 2.0% exceeds the 5-year rate of -8.7% and the 10-year rate of 10.0%.
Dividend Safety
BAC: The payout ratio of 28% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 3.5x.
TROW: The payout ratio of 55% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 7.3x.
Estimated Annual Dividend Income
Based on current dividend yields. Actual income may vary.
What does $10,000 buy in BAC vs TROW today?
At $52.38 per share, $10,000 buys about 190.9 shares of Bank Of America Corp /De/ (BAC). Each share pays $1.08 per year in dividends, so the position starts out generating roughly $206 per year — about $17 a month.
At $93.63 per share, $10,000 buys about 106.8 shares of Price T Rowe Group Inc (TROW). Each share pays $1.27 per year in dividends, so the position starts out generating roughly $136 per year — about $11 a month.
BAC is the larger income stream from day one: $71 per year more on the same $10,000 invested.
What could $10,000 of BAC or TROW income look like in 10 years?
Bank Of America Corp /De/ (BAC) has raised its dividend about 8.5% a year over the past five years. If that pace held, the $195 per year that $10,000 generates today at the current 1.95% yield would reach $440 per year by 2036 — a 4.4% yield on the original cost.
Price T Rowe Group Inc (TROW)'s dividend has shrunk about 8.7% a year over the past five years. If that trend continued, today's $131 per year on $10,000 (at the current 1.31% yield) would fall to $53 per year by 2036.
On those trailing rates, BAC pays more in 2036: $440 versus $53 per year. The projection assumes each five-year growth rate persists and no dividends are reinvested — real payouts will differ.
When would TROW's dividend growth overtake BAC's higher yield?
It doesn't, on the trailing numbers. Bank Of America Corp /De/ (BAC) yields more today (1.95% vs 1.31%) and has also grown its dividend at least as fast (8.5% vs -8.7% a year over five years). Unless TROW accelerates its raises or BAC stumbles, TROW never closes the income gap — BAC wins on both current income and growth.
Can BAC and TROW afford their dividends?
Bank Of America Corp /De/ (BAC) earns $3.81 per share against $1.08 paid out in dividends — 3.5x coverage (a 28% payout ratio).
Price T Rowe Group Inc (TROW) earns $9.24 per share against $1.27 paid out in dividends — 7.3x coverage (a 55% payout ratio).
TROW's wider coverage leaves more cushion if earnings dip. As a rule of thumb, coverage below about 1.5x (a payout ratio above ~65%) is where a dividend starts to look stretched — worth watching for BAC if earnings weaken.
Which fits an early-retirement income portfolio better, BAC or TROW?
For income you need right now, Bank Of America Corp /De/ (BAC) leads: $100,000 invested today pays about $162 a month at the current 1.95% yield, versus $110 a month from Price T Rowe Group Inc (TROW) at 1.31%.
BAC also leads on dividend growth (8.5% vs -8.7% a year over five years), so the trailing numbers favor it on both fronts.
On consistency: BAC has raised its dividend 12 consecutive years; TROW has raised its dividend 3 consecutive years.
Many income investors simply hold both — the mix pairs current yield with growth and spreads single-name risk. Whichever way you lean, dividends are never guaranteed; recheck the payout each quarter rather than setting and forgetting.
$10,000 with DRIP: projected annual income
If each holding keeps raising its dividend at its real 5-year rate and every payment is reinvested, a $10,000 position pays $534/yr in BAC vs $60/yr in TROW by year 10.
Assumes dividends are reinvested at the current yield and grow at each holding's trailing 5-year dividend CAGR. A projection, not a prediction — no price appreciation modeled.
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