Bank of America's Top Dividend Picks for August

Bank of America has indicated a potential resurgence in dividends, predicting that their contribution to overall market returns will be significantly higher than in the past decade. In a recent note, equity and quant strategist Savita Subramanian highlighted that while dividend stocks have underperformed compared to the broader market—illustrated by the Schwab U.S. Dividend Equity ETF's 8% return versus the S&P 500's 17%—the current economic climate may favor a shift towards dividend-paying investments. Subramanian noted that the Federal Reserve's potential rate cuts could positively impact stock performance, suggesting that investors should prioritize dividend stocks with sustainable yields rather than those that appear attractive but are risky. She emphasized the importance of selecting stocks that offer above-market yields while maintaining financial stability. Among the stocks recommended by Bank of America for August is PNC, which is characterized as a "sleep at night" investment due to its projected 14% annual earnings growth and a 15% return on tangible common equity. The bank anticipates that PNC's free cash flow will exceed $12 billion, contributing to its nearly 20% stock price increase this year and a dividend yield of 3.41%. Additionally, utility company PPL, yielding 3.27% and gaining 16% year to date, is also highlighted. With a portfolio that includes senior housing communities, PPL is expected to benefit from demographic trends related to an aging population, further solidifying its position in the dividend stock landscape.