Bank of America (BAC) says it has just approved a new multi-billion-dollar stock-buyback program.
In a new announcement, the largest bank stock in Warren Buffett’s Berkshire Hathaway portfolio says its board of directors has approved a $40 billion common stock repurchase program that goes into effect on August 1st.
A stock buyback is when a company buys shares of its own stock, reducing the total number of outstanding shares, according to Bankrate. Buybacks are seen as a way to increase value for investors.
Says Bank of America,
“[Wednesday’s] authorization will continue providing additional capital return flexibility, reflecting the company’s commitment to return to shareholders excess capital that is not needed to support economic growth, deliver for customers and communities, invest in the future and sustain strength and stability through the economic cycle.”
The new program replaces the existing program, which had $9.1 billion in common stock repurchases remaining.
Bank of America also announced a dividend increase of $0.02 from the prior quarter, for a total of $0.28 per share. The dividend is payable on September 26th to shareholders of record as of September 5th.
Bank of America has a market cap of $360.3 billion and is trading for $48.45 per share at time of writing.
Berkshire Hathaway owns more than 631.57 million shares of Bank of America, its fourth most valuable holding, behind Apple, American Express and Coca Cola.
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