JPMorgan vs. Bank of America: Which Dividend Stock Is Better for Retirement?
One bank missed earnings after a $1.2 billion settlement charge, while the other just boosted its payout. Yet the cheaper stock with the juicier yield may not be the safer place for retirement income. Three scorecards reveal the tradeoff.
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JPMorgan Chase (NYSE:JPM | JPM Price Prediction) or Bank of America (NYSE:BAC): which bank dividend looks stronger for someone building a retirement portfolio right now? Third-quarter earnings made the choice clearer. Bank of America posted adjusted EPS of $1.08, missing the $1.10 estimate, after a $1.2 billion regulatory settlement charge. JPMorgan reported EPS of $5.57 and a 20% return on tangible common equity. In September, it had already raised its quarterly dividend to $1.65 from $1.50.
Both banks make money in the same two ways. The first is net interest income, the gap between what they earn on loans and what they pay on deposits. The second is fees from trading, dealmaking, and wealth management. JPMorgan leans harder on Wall Street: in Q2, corporate and investment bank revenue rose 27% to $24.85 billion. Bank of America runs more like a deposit machine, with $2 trillion in deposits and $1.2 trillion in loans, and its Q3 net interest income rose 8% to $16.45 billion.
Valuation: Bank of America Sells at a Steep Discount
Bank of America trades at 12 times trailing earnings and 10 times forward earnings. JPMorgan trades at 14 times on both measures. On price-to-book, the gap widens to 1.311 versus 2.662. Bank of America shares are down 8.69% year to date, while JPMorgan is up 5.79%. That selloff drives Bank of America’s forward yield to about 2.6% on a $1.28 annualized payout. JPMorgan yields roughly 2.0% on $6.60. Winner: Bank of America.
Dividend Growth and Coverage: JPMorgan Raises Faster
JPMorgan’s quarterly dividend has risen from $1.05 in early 2024 to $1.65, a gain of about 57%. Over the same stretch, Bank of America went from $0.24 to $0.32, about 33%. Coverage is comfortable at both banks. JPMorgan pays out roughly 26% of trailing EPS of $23.84, and Bank of America pays out about 28% of $4.19. CEO Jamie Dimon put the dividend first in line: “After you pay your dividend, which hopefully will be steady, we really like investing in organic growth.” Winner: JPMorgan.
Capital Strength and Risk: JPMorgan Carries the Thicker Cushion
JPMorgan ended Q3 with a CET1 ratio of 13.9%, and Dimon estimates “$30 billion or something of excess capital.” Bank of America’s CET1 ratio is 10.9%, which its CFO describes as 90 basis points above the regulatory minimum. Bank of America also has the higher beta, 1.192 against 1.02, along with the OCC and FinCEN consent orders, although management says the orders come with no asset cap.
Historically, both banks cut their dividends in the financial crisis, but Bank of America paid just $0.01 a quarter from 2009 through 2012, while JPMorgan was back to $0.25 by 2011. Over 10 years, JPMorgan shares rose 519.86%, compared with 263.38% for Bank of America. JPMorgan has risks of its own to monitor: a card net charge-off rate of 3.33% and noninterest expense up 15% year over year. Winner: JPMorgan.
Verdict: JPMorgan Earns the Retirement Slot
For investors at or near retirement, JPMorgan is the stronger dividend holding. The bank boasts the bigger capital buffer, raises its payout faster, and has a better record of protecting shareholders through the crisis cycle. That safety comes at the cost of a bit of starting yield, a tradeoff income-focused retirees may consider carefully. (Building a retirement income stream that never forces you to sell shares is its own discipline, and we laid out the full dividend ladder in a free guide here.)
Bank of America suits a different investor: someone with a decade or more before drawing income who wants a higher starting yield and a discounted stock. Management expects net interest income growth of 8% or more in 2027, which gives that investor a real path to a rebound. Over the next few quarters, watch whether Bank of America returns to positive operating leverage in Q4 as promised. At JPMorgan, track the slower buyback pace, which analysts noted was running near $1 billion against a normal rate of around $7 billion.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
