5 Best Large Cap Dividend Growth Stocks To Buy

4. Bank of America Corporation (NYSE:BAC)

Number of Hedge Fund Shareholders: 99

5-Year Dividend Growth Rate: 19.8%

Bank of America Corporation (NYSE:BAC) boasts the highest 5-year dividend growth rate among the stocks in this list at a nearly 20% CAGR, with its dividend payments nearly tripling between 2016 and 2022. Its dividend yield has been pushed to a respectable 2.43% thanks to that and with Bank of America’s payout ratio standing around 27%, there’s plenty of room for further long-term dividend growth.

That’s particularly true in the current rising interest rate environment, which is allowing investment banks like Bank of America and JPMorgan (up next on the list) to rake in boatloads of cash thanks in part to their stable of noninterest-bearing deposits. Bank of America grew its net interest income by 24% year-over-year during Q3 and is poised for billions more in the quarters to come as interest rates continue to push higher.

Bank of America Corporation (NYSE:BAC) was the 14^th most popular stock among hedge funds in Q2, though ownership of the stock has fallen substantially since the first quarter of 2017, falling by 40% during that time. Warren Buffett’s Berkshire Hathaway owns 1.01 billion BAC shares as of June 30, worth over $31.4 billion.

Ric Dillon’s Diamond Hill Capital Management discussed some of the reasons why investors fled Bank of America Corporation (NYSE:BAC) shares during Q2 (down 24.5%) in the fund’s Q2 2022 investor letter:

“Bank of America Corporation (NYSE:BAC) shares were weak in Q2 as the market became increasingly focused on the possibility of a near-term recession and the potential for credit losses along with current fee revenue pressures.”