Wirecard North America seeks buyer, distances itself from German company By Reuters


© Reuters. FILE PHOTO: A man walks past the Wirecard booth at the computer games fair Gamescom in Cologne, Germany

(Reuters) – Wirecard North America Inc, a unit of German payments company Wirecard AG (DE:), on Monday said it has put itself up for sale, days after the troubled parent firm filed for insolvency. The U.S.-based unit, which was bought by Wirecard in 2016, said an investment bank is coordinating the sale process. The unit was formerly known as Citi Prepaid Card Services.

It did not provide further details but said Wirecard North America is a separate legal and business entity of Wirecard and is “substantially autonomous” from the German company, adding that it remains “self-sustaining”.

Last week, Wirecard filed for insolvency owing creditors almost $4 billion after disclosing a 1.9 billion euro ($2.14 billion) hole in its accounts that its auditor EY said was the result of a sophisticated global fraud.

The company said on Saturday it would proceed with business activities after the insolvency filing and an administrator was appointed on Monday.

($1=0.8895 euros)

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‘America just really needs to start being honest with itself’: How money and the slave trade shaped policing in the U.S.


Over the past few weeks, the nation has been grappling with the history of systemic racism in our police system. But fewer may realize how far back this tradition goes.

To better understand this history, MarketWatch spoke with Luke Frederick, a doctoral candidate at Georgetown University who is studying the relationship between the slave trade, policing and incarceration during 17th and 18th century America.

MarketWatch: What role did money and finance play in the period and topics you study?

Luke Frederick: First off, it’s important to recognize that the slaves themselves were a commodity and the most valuable sector of commodities — to use that inhumane phrase — in the country and that was the case up through the Civil War.

The control, the movement, the coercion of these enslaved people was the economic engine of the country, which then spun off all of these other industries, whether they be banking, whether they be slave owners or slave traders reinvesting their money into what we would recognize as the industrial revolution.


‘Slavery is the economy. Not everyone owned slaves themselves, but everyone was trying to get a piece of this money.’


— Luke Frederick, Ph.D candidate at Georgetown University

The North and the Midwest are also dependent on this slave economy. They’re selling their foodstuffs to the south, banking and insurance industries are heavily tied in with slave mortgages and slave insurance. It’s really the labor and the value in these enslaved bodies … that the main financial instruments were running through.

Slavery is the economy. Not everyone owned slaves themselves, but everyone was trying to get a piece of this money, you can think about it maybe like this tech space we’re in today. You may not create your own app, but maybe you are working on the servers or you’re making the website for someone else. It’s just like today in that whether you were a private businessman, whether you were a farmer, whether you were a bar owner, everyone is trying to get a slice of these slave profits.

Luke Frederick is a Ph.D candidate at Georgetown University.


Courtesy of Luke Frederick

MW: What role did cities and local governments play in trying to access these profits?

Frederick: For example, in D.C., the slave traders had to pay for licenses to operate in the city. If you wanted to operate a private slave jail, you would have to pay that fee also. That was a revenue enhancement mechanism.

MW: What is a private slave jail?

Frederick: The private jails are really operating for the domestic slave trade. There was a surplus of slaves in Virginia, North Carolina [and other upper Southern states]. Tobacco is going by the wayside and being replaced with wheat, which requires less labor. At the same time, you have cotton starting to boom in the deep South.


The city jails were competing with private jails for room and board so slave traders to lock up slaves as they traveled south.

These slave traders are using the upper South as their supply point and then bringing [slaves] down south. These jails are opening up in cities in between — they’re in Baltimore, D.C. Norfolk, Richmond.

It’s about a two-month journey to walk from D.C. to New Orleans or Natchez, Mississippi. As [slave traders] would go overnight, if they were in a city and they could afford it, they would lock these slaves up in these private jails. They’re charging a basic room and board fee. The city jails are competing with these private jails for that room and board fee.

MW: What did police forces look like during the period you studied? What role did money play in those police systems?

Frederick: What we’re really seeing are the deepest darkest fears of the founding fathers in terms of policing. When they were thinking about how to separate themselves from Britain after the revolution, the three main [aspects] of criminal justice that they wanted to get away from were: Capital punishments for every crime, they didn’t want a standing army and they didn’t want a national police force.


‘The number one thing that they need the police for is to guard against slaves and Native Americans.’


— Luke Frederick, Ph.D candidate at Georgetown University

If you’re not going to have a national police force that means you’re going to have local police. Then the question comes down to who is going to pay for it? The answer was no one is going to pay for it. [During the antebellum period], they go to patrols.

It’s very transactional, it’s not salaried, every single service that a police man would do has a fee attached to it.

You have a whole section of the legal code that is etched out for black people, both slave and free. That seems to draw the attention of police forces.

There are policing traditions in England, it’s not like everything was cut from whole cloth in America, but the big problem was slavery. Once race and slavery gets interjected into this policing tradition it develops in a totally different form in the Americas then. The number one thing that they need the police for is to guard against slaves and Native Americans. That’s why they come up with black codes.

MW: How did that system contribute to what we see today?

Frederick: It criminalizes blackness. From the very earliest moments, black people are seen as suspicious, as dangerous, as subversive.

The law is saying that these are not citizens, they are non-persons, so any of this English legal heritage about freedom and trial by jury and due process don’t apply. Once America comes up with its founding documents, these documents also don’t apply. On the one hand, they’re criminalized by the system but, on the other hand, they’re not recognized by the system.


‘From the very earliest moments, black people are seen as suspicious, as dangerous, as subversive.’

When we think of a runaway slave, we think about them running through a field and there’s a slave posse after them and it’s the vigilante guys. Quite often, it was a police officer that’s tracking down these runaway slaves, that was part of their job.

If you look at a runaway-slave ad, most of them will say: “Billy ran away, here’s a description, here’s the clothes that they stole. If you find him I’ll give you a $50 reward. If you find him, take him to Frederick county jail and I’ll pick them up there. This is a huge money maker for [police], they would get half of the private reward money, at least in Washington.

The police also served as a disciplinary mechanism. Let’s you were too squeamish to whip your own slaves or you didn’t want to have that tension, you could take him to the police [and pay him 50 cents to do it]. The policeman just pockets that 50 cents, that’s straight commission.

The hinge in all of this is this man named Isaac Franklin, who was a slave trader in Washington, D.C. and in Alexandria, Va. Once he retired, he bought a plantation in Louisiana and that plantation was named Angola. Today it exists as Angola prison in Louisiana. That guy right there is really this sort of middle point in this system of the 1820s, and what we had in the 1920s and what we have in 2020.

MW: How does this history relate to today’s calls to defund the police?

Frederick: It really shows the triumph of policing. In the beginning no one wanted to pay for this. No one wanted to pay the salaries, buy the equipment, buy the horse, build the jail. Today they have no problem getting money.

The other thing is they had to really struggle with this idea of: We just fought this war based on liberty and we’re doing away with social and economic hierarchies [and] now we say if you break a law were going to take away your liberty and put you in jail. That’s no longer a conundrum for anyone.

The other thing about these police in the 19th Century — they did all types of stuff that we wouldn’t think of as policing today. They were out shooting stray dogs and cleaning up dead horses and doing a lot of things that you wouldn’t really think police need to do. In the early 20th Century, all of these other public departments come online and they start to take these responsibilities away from police.

We’re on the opposite end of that, all of these things have been slashed, there’s no other type of agency out there to deal with these issues so it all falls on the police. I’m anti-police in how they exist today, but I will be the first to recognize that they have way too much to do.

MW: What can we do to deal with this legacy?

Frederick: America just really needs to start being honest with itself about where things come from and its history and what’s really going on. Wide swaths of America have been able to live for generations believing in things that are just flat out myths or taken out of context or not historically accurate. You have a large segment of America that has existed in this country, almost with a fantasy.

(This conversation was edited and condensed for style and space.)



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Yes, America needs to brace itself for a second wave of coronavirus


Americans should brace themselves for another round of coronavirus in the fall, health professionals and economists say. The Organization for Economic Cooperation and Development released its twice-a-year economic outlook on Wednesday, and presented two scenarios — one where the coronavirus continues to recede, and another where a second wave of rapid contagion erupts later in 2020. It said a second wave of SARS-CoV-2 is as likely as not. OECD Chief Economist Laurence Boone said both forecasts are equally probable.


‘We can only look at what other seasonal coronaviruses and seasonal influenzas do. Based on that, most of us feel comfortable there will be a second wave.’


— Gregory Poland, who studies the immunogenetics of vaccine response in adults and children at the Mayo Clinic

Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases for three decades and one of the leading experts on the pandemic in the U.S., said on Tuesday, “In a period of four months, it has devastated the whole world. And it isn’t over yet.” He added, “Where is it going to end? We’re still at the beginning of it.” Yet last week, he said, “We don’t inevitably have to have a second wave.” Fauci has previously said that a vaccine could take 12 to 18 months and that would be a game changer. Some observers say even that timeline is wildly optimistic.

Many epidemiologists advise more caution when talking about the reduced prospect of a second wave. Gregory Poland, who studies the immunogenetics of vaccine response in adults and children at the Mayo Clinic in Rochester, Minn., and who is an expert with the Infectious Diseases Society of America, told MarketWatch, “Nobody has a crystal ball. We’d all like to know definitively. We can only look at what other seasonal coronaviruses and seasonal influenzas do. Based on that, most of us feel comfortable that there will be a second wave.”

While COVID-19’s progress has slowed in major cities such as New York, where most cases in the U.S. are centered, confirmed coronavirus cases have risen by double-digit percentages in 16 U.S. states that have gradually loosened restrictions since Memorial Day, an analysis by the Washington Post shows. Cases rose by 10% in Alaska, California, Delaware, Georgia, South Carolina; 11% in Iowa, New Hampshire, South Dakota, Virginia; 12% in Arizona, North Carolina, Tennessee; 13% in Arkansas; 14% in Alabama and Minnesota; and 15% in North Dakota over that period.

During the great influenza pandemic of 1918, the second wave was worse than the first, partly due to a more virulent strain of the virus. Another complication: Flu and SARS-CoV-2 have almost identical symptoms: fever, coughing, night sweats, aching, tiredness, and nausea and diarrhea in severe cases. Like all viruses, neither are treatable with antibiotics. They can both be spread through respiratory droplets via coughing and sneezing, yet hail from different virus families. There is still no universal flu vaccine, even though scientists have been researching the flu since the 1940s.

Poland likens our desire to get back to normal life to the fable of the tortoise and the hare, and advocates clear, consistent messaging. “The race doesn’t always belong to the swiftest. The public and political pressure is for a vaccine as soon as possible. Public pressure is not data. Moderna hasn’t produced data from their Phase 1 vaccine trial. We’re going to have to be very careful here. We have individual countries, individual mayors, governors, senators, the House and the president all inferring their own recommendations. What the public hears is just static.”


‘In a period of four months, it has devastated the whole world. And it isn’t over yet … Where is it going to end? We’re still at the beginning of it.’


— Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases for the last three decades

Approximately 10% to 20% at the very most of the U.S. population will be immune to the new coronavirus next time around, Poland said. “That means 70% to 80% of us are immunologically naive. People think because we hit Memorial Day and we have nice weather that it’s over. It ain’t over. When coroanvirus hit earlier this year, 99% of the seasonal influenza was over. This won’t happen next time, and they have similar symptoms. We still don’t have testing solved. Health-care providers are exhausted. They still don’t have enough personal protective equipment.”

Similar to Poland, Mike Ryan, executive director of the World Health Organization’s Health Emergencies Program and former epidemiologist specializing in infectious disease and public health, in May warned of complacency surrounding relaxation of social distancing measures. Countries should “continue to put in place the public-health and social measures, the surveillance measures, the testing measures and a comprehensive strategy to ensure that we continue on a downwards trajectory, and we don’t have an immediate second peak,” he said.

Flattening the curve of new cases through social distancing, testing and contact tracing will help to avoid overwhelming the health-care system during any possible second wave, health professionals say. The U.S. has about 2.8 hospital beds per 1,000 people, according to industry website STAT News, which reports on public health and science issues. “With a population of 330 million, this is about 1 million hospital beds. At any given time, about 68% of them are occupied. That leaves about 300,000 beds available nationwide,” the publication said.

Letter from New York:‘When I hear an ambulance, I wonder if there’s a coronavirus patient inside. Are there more 911 calls, or do I notice every distant siren?’


Many epidemiologists advise more caution when talking about the reduced prospect of a second wave.


MarketWatch photo illustration/Getty Images

Robert Redfield, director of the Centers for Disease Control and Prevention, recently told the Financial Times that he “can’t guarantee” that there won’t be more stay-at-home requirements in the winter or the fall. “We are committed to using the time that we have now to get this nation as over-prepared as possible. We’ve seen evidence that the concerns it would move to the southern hemisphere like flu [are coming true],” Redfield told the U.K. paper, adding, “When the southern hemisphere is over I suspect it will re-ground itself in the north.”


‘Can you travel from the southern hemisphere to the northern hemisphere this summer? Of course you can. That will spark a second wave.’


— Gregory Poland, who studies the immunogenetics of vaccine response in adults and children at the Mayo Clinic

How are we going to prepare for a possible second wave? “Human behavior is controlling the pandemic’s parameters,” Poland added. “In a lot of the southern hemisphere, there is not the same public-health infrastructure, medical infrastructure and not the same access to PPE. There are also a host of other cultural factors that are different. Can you travel from the southern hemisphere to the northern hemisphere this summer? Of course you can. That will spark a second wave.” That, he adds, doesn’t account for further transmission during the recent riots across the U.S.

Mutation is another unknown. “This is an RNA virus and inherently a virus that will mutate and undergo recombination. When people are co-infected with two or more strains, the virus has the opportunity to trade genetic material. Patients in neighboring hospital beds might have subtly different coronaviruses. Now you provide the petri dish for them to combine. We hear things like “operation warp speed.” Never before have I seen politics, public opinion/public pressure and economics weigh so heavily on the science to subvert and pervert it.”

“If we’re not expecting a second wave or a mutation of this virus, then we have learned nothing,” New York Gov. Andrew Cuomo said. “That is why it is such an important period for government.” Poland paints a grim worst-case scenario for this: “Imagine this scenario: It’s October. The influenza epidemic occurs, COVID-19 comes back. We’re fussing with China. There’s been a glitch with Moderna trials. There’s another police killing, and now the riots are inflamed because nothing appears to be fixed, and we’re in the middle of a political campaign. This does not have good optics to me.”

“If I were king for a day, brother, this would be run differently,” Poland said. “I would take a Consumer Reports/Good Housekeeping approach. I’d get the best experts assembled, something like the National Academies of Science, and this would be the kitchen cabinet who would recommend what kind of studies we need to do now to get the best kind of data to inform best practices. I would not waste any of my time sniping politically at anybody else. I would be a wartime king. I would fund all of the nudges to encourage good behavior, and have radical transparent honesty with the public.”


After worrying exponential growth in the early days of the pandemic, other countries moved quickly to flatten the curve of new cases.

The Dow Jones Industrial Index
DJIA,
+1.90%

and the S&P 500
SPX,
+1.30%

ended higher Friday, as investors weighed progress in COVID-19 vaccine research amid fears of rising cases of coronavirus in U.S. states that have loosened restrictions.

The number of confirmed COVID-19 cases continues to rise. Less than six months after the first reports of the novel coronavirus, the COVID-19 pandemic, which was first identified in Wuhan, China in December, had infected 7,854,514 people globally and 2,091,348 in the U.S. as of Sunday. It had claimed at least 431,543 lives worldwide, 115,706 of which were in the U.S., according to Johns Hopkins University’s Center for Systems Science and Engineering.

For his part, Fauci credited an improvement in testing and contact tracing as a way to help avoid a second wave of coronavirus. “It’s the way we and the efficiency and effectiveness in which we put the manpower, the systems, the tests, to identify isolate and contact trace that will determine how successful we are in preventing that wave,” Fauci told CNBC’s “Halftime Report.” The U.S. health-care system will also have an opportunity to stock up on ventilators and PPE and, in an ideal world, people will understand the benefits of social distancing.

That same strategy of testing and tracing people who have tested positive so they can be quarantined appears to have worked in other countries, most notably Iceland. After worrying exponential growth in the early days of the pandemic, Iceland’s government has flattened the curve of new cases. Only six new cases of COVID-19, the disease caused by the novel coronavirus, were detected in May. There have been only three new cases so far this month, bringing the total number of confirmed cases to 1,807 and the total number of deaths from COVID-19 to 10.

In a few short months, scientists around the world have learned a lot about SARS-CoV-2, including the virus’s genetic structure; how it infects human cells; what kind of disease manifestation it causes; and how it impacts the liver, kidney and brain, and how secondary symptoms affect children. That progress has been reflected in the Dow Jones Industrial Index and S&P 500, which recovered most of the ground lost earlier in the pandemic. Equity indexes have ricocheted in recent months as markets remained nervous of progress on vaccine research.

Poland cautions against read into public debate or the markets as an indicator of what the virus will do next. “The coronavirus only knows one thing,” he says, “and that is to infect another host.”



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Bank Of America: Buy It Now Before This Ship Sails (NYSE:BAC)


Written by Sam Kovacs

Introduction

Just less than one month ago, when Robert and I shared our model “All Weather Dividends Portfolio” on Seeking Alpha, we selected Bank of America (BAC) as our All Weather financial stock of choice. At the time, the stock was trading at $21 and yielding over 3.3%. We agreed that I would write an article suggesting that dividend investors should buy BAC at such bargain prices. But, within just a few short weeks, the stock is up 30%.

Such hectic stock market movements might make your head spin. You might think you’ve missed the boat.

Source: Open Domain

This might have been the case for some of the stocks we suggested buying. Yet BAC was so undervalued when we suggested buying it a month ago that the current price would still warrant a purchase.

BAC has a dividend yield of 2.56% and trades around $28.11. Based on our MAD Scores, BAC has a Dividend Strength score of 93 and a Stock Strength score of 77.

This article will present and discuss the factors which show why I believe that dividend investors should invest in Bank of America.

Source: mad-dividends.com

The V-shaped recovery which most thought was impossible has occurred. Robert and I have been agnostic in so far as the movement of stock prices is concerned. Yes, the stock market is now disconnected from the economy. Yes, overoptimistic expectations are baked into this market. Yes, that frightens us.

Yet we remain committed to being net buyers of stocks in all environments. The trick lies in investing in dividend stocks which fit in nicely to our strategy. (You can read more on our strategy in our article “Dividend Investing For Individuals Like You & Me”).

Our approach might confuse some investors, but for those who “get it”, it gives a framework which makes managing a dividend portfolio much more straightforward, removing much of the guesswork from the process.

For instance, it is thanks to this framework that I sold V.F. Corp. (VFC) between $85 and $90, to then purchase it back in the $50s avoiding dire downside risk and increasing my income on the position by more than 60% in the process.

The very same framework tells me that, even after rallying 30% from our purchase point back in May, BAC is still a buy now. But if this market continues in the same direction, you’ll miss the boat.

Dividend Strength

At the forefront of our framework is the concept of dividend strength. It encapsulates both the concepts of dividend safety and of dividend potential. The former ensures that we don’t invest in stocks which are likely to cut their dividends. The latter ensures the dividend will contribute significantly to total returns and to our dividend goals; it can be considered as the combination of current yield and dividend growth potential: the higher the yield, the lower the required dividend growth, and vice versa.

Dividend Safety

28% of Bank of America’s earnings are paid out as dividends. This is a more attractive payout ratio than 72% of dividend stocks.

BAC pays 9% of its operating cash flow as a dividend, putting it ahead of 85% of dividend stocks.

31/03/2016

31/03/2017

31/03/2018

31/03/2019

31/03/2020

Dividends

$0.2000

$0.2900

$0.4400

$0.5700

$0.6900

Net Income

$1.25

$1.70

$1.77

$2.69

$2.45

Payout Ratio

16%

18%

25%

22%

29%

Cash From Operations

$4.19

$-0.53

$6.25

$1.49

$7.57

Payout Ratio

5%

-54%

8%

38%

10%

Source: mad-dividends.com

During the past 5 years, BAC’s net income per share has just about doubled, yet in the meantime, the dividend has more than tripled. How should this be understood? After cutting its dividend to just 1 penny per share in 2009, BAC has been aggressively ramping up the amount it pays out each year since 2016. Yet, at 29% of earnings, we can all agree that the dividend still has lots of room before it would be considered unsafe.

Following the Great Financial Crisis, the scrutiny on banks and increased regulation has changed the nature of their operations. The higher reserves add in a margin of safety, and even after a tough Q1 in which BAC was forced to increase reserves considerably, it still earned more than twice the amount paid in dividends.

To quote management in the latest earnings call:

But in terms of the dividend, we kept the dividend payout ratio below 30% of the sort of normalized earnings level and we did it for a reason that one of our operating principles is we wanted to maintain a dividend. And given what we know, we have earned twice the dividend this quarter at $0.40 versus $0.18 payout ratio and we expect that to continue

BAC’s dividend is very safe. I do not believe it will come to be cut.

Dividend Potential

Bank of America’s dividend yield of 2.56% is higher than 45% of dividend stocks. While the yield is quite lower than the 3.3% the stock paid just less than a month ago when I purchased shares, it is still considerably higher than the stock’s median dividend yield of 1.18% during the past decade. BAC only closed 3% of trading days in the last 10 years with a dividend yield higher than 2.56%, all of which were in the past couple of months.

Source: mad-dividends.com

This last year, the dividend grew 20%, which is slightly lower than their 5-year CAGR of 29%.

This rate of dividend growth is obviously not sustainable in the long run and should be considered a ramp-up dividend growth rate.

Source: mad-dividends.com

After four quarters at $0.18, investors are looking to BAC to see if they will keep this new streak of dividend increases alive. I personally believe they will, as a show of strength, but that investors shouldn’t expect much more than a token increase of 1 cent per share this year. However, I expect BAC to resume 10-15% dividend growth in subsequent years, thus resuming its ramp-up.

Over the previous 3 years, Bank of America has seen its revenues grow at a 2% CAGR and net income by a 6% CAGR. The last decade has been a challenge, and the bank’s revenues and earnings were finally going in the right direction during the past 5 years, before COVID-19 hit.

Source: mad-dividends.com

The growth in net income translates to a higher net income per share because of BAC’s generous commitment to buybacks in the past two years, reducing the share count by 15%.

Below 2.5%, I wouldn’t be interested in BAC, because I don’t believe they will average 20% dividend growth over the next 5 years. I do believe they will average between 10% and 15% however, and this level of growth would still be suitable with the current yield.

Dividend Summary

The combination of the data presented above gives BAC a dividend strength score of 93/100. The dividend is invariably extremely safe, and management has shown commitment to growing its dividend.

However, BAC’s dividend streak is still quite new, and management’s commitment to dividend growth will truly come through in the next dividend announcement. While my expectations are just for a minimal $0.01 increase per share, management could show a show of strength by increasing by $0.02, thus increasing the dividend by 11%, while many stocks are cutting dividends.

BAC is still attractive to dividend investors at current prices, yet if you wait too long, you might miss the boat.

Stock Strength

BAC still is a good buy for dividend investors. But what of its likelihood to outperform the market in upcoming quarters? I’ll turn to our factor analysis, analyzing both BAC’s value and momentum.

I’ll omit the quality analysis, as our quality score’s meaning is close to irrelevant on banks. Many of the standardized ratios we use to calculate the quality score wouldn’t be used in assessing a bank’s stability and quality. As such, BAC scores awfully at 14/100. To put this in perspective, Citibank (NYSE:C) scores 11/100 and WFC scores 8/100. This is due to differences in the structure of a bank’s balance sheet.

Value

  • BAC has a P/E of 11x
  • P/S of 2.68x
  • P/CFO of 3.71x
  • Dividend yield of 2.56%
  • Buyback yield of 9.33%
  • Shareholder yield of 11.89%.

These values would suggest that BAC is more undervalued than 93% of stocks, which is very encouraging. However, it should be noted that the forward buyback yield will likely be 0% as BAC has suspended its buyback program, as have most companies. Its PE is in line with that of its sector, as is its dividend yield and price to sales. Its price to cash flow is exceptionally low, however. Compared to BAC’s 10-year median PE, the stock is still very fairly valued.

Source: mad-dividends.com

While trading just below its median PE for the 10-year period, BAC seems to still offer considerable value. Buybacks have been suspended, as they should in these times of uncertainty, but I’m quite sure they will resume within a year or two, to supplement explosive dividend growth. BAC still appears around 10% undervalued.

Value Score: 93/100

Momentum

Bank of America’s price has increased 4.97% these last 3 months, despite being down -15.05% these last 6 months and just about flat these last 12 months and, now, currently, sits at $28.11.

Source: mad-dividends.com

BAC has better momentum than 57% of stocks, which I find to be encouraging. The challenge will come in upcoming weeks as the 200-day SMA comes within striking range of the stock price. I see some likely resistance at the $30 mark, yet a crossing of the 20-day SMA and 50-day SMA could be a breakout event for BAC, catapulting it back up above $30 per share. I see such an event as about 30% likely, with the most likely outcome being the price bounces off $30 and trades between $26 and $30 for a while.

Momentum score: 57/100

Stock Strength Summary

When combining the different factors of the stock’s profile, we get a stock strength score of 77/100, which is very encouraging. The low quality score is compensated by the usually higher value scores which banks command. The momentum indicates that BAC is turning around despite still being 18% lower than its high point. A show of strength in the next dividend announcement in July would go a long way to position BAC as the superior bank to hold throughout all markets and could fuel further capital appreciation.

Conclusion

With a dividend strength score of 93 and a stock strength of 77, Bank of America is a good choice for dividend investors, provided that they can purchase the stock when it yields 2.5% or more. Above 3%, it was a bargain, but who knows when such an opportunity might come again?

If you were unable to load up during the past months, now might be the last change you get before this ship sails.

Liked this article and want more such dividend analysis? Then click on the orange “follow” button at the top of this page so that we can let you know when we next publish an article on Seeking Alpha

Disclosure: I am/we are long BAC, VFC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.





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The only way to truly solve the race problem in America is to narrow the wealth gap, black economists say


The unrest in cities across the U.S. this week is just the latest manifestation of a struggle that will continue until the wealth gap between white people and black people is addressed, black economists said.

What is the wealth gap? It is the stark divide between how much capital white people and black people control.

By one estimate, the typical white family has wealth of $171,000. This is nearly ten times greater than the $17,150 for an average black family.

Put another way, the typical black household remains poorer than 80% of white households.

This stunning wealth gap between the races has persisted, in good times and bad, for the past 70 years. It did not get better after the civil rights era legislation was passed in the 1960s or during the Obama administration.

And it will continue to fuel unrest, economists said.

“As long as we have racial wealth gap, we’re going to have a problems with race,” said Patrick Mason, an economics professor at Florida State University.

“The wealth gap is one of the reasons there are protests today,” said Linwood Tauheed, a professor of economics at The University of Missouri-Kansas City and the president of the National Economics Association.

“I don’t necessarily want to use the phase it was the straw that broke the camels back…but we have lots of evidence that this economic system is not benefitting the majority of the population,“ he said.

“African Americans are dissatisfied with the way things are — that’s not new for us— but now you find young college students dissatisfied with their future.”

See: Protesters support Floyd, Black Lives Matter on 3 continents

The COVID-19 pandemic has highlighted the fact that African-Americans have a lack of income to buy necessary health care, food and medicine and are suffering in greater numbers than white Americans.

Since the 1960s, the wealth gap has been largely ignored by the economics profession, black economists say.

For years, black economists struggled in the American Economics Association to even study the subject of wealth disparity between the races, black economists said. Universities and think tanks also didn’t support the work.

Black economists formed their own association, the National Economics Association, in 1969 to study the economic situation of black Americans.

“It was very difficult for a black economist to present a paper at an AEA conference that was questioning whether mainstream economists were understanding the economic disparity between the white and black community,” Tauheed said.

So called “mainstream” economists were really interested in more efficiency. “The wage gap is a question of equity or how to expand the pie,” said Karl Boulware, an economics professor at Wesleyan University. “The best way to think of wealth is to think of it as power,” he said.

In a statement to her membership Friday, former Federal Reserve chairman Janet Yellen, who is the president of the AEA, said her organization has “only begun to understand racism and its impact on our profession and our discipline.”

The wealth gap since 1989

The causes

Black economists say one historical cause of the wage gap is slavery.

“I don’t want to offend anybody, and don’t want to be labeled a radical but the wealth gap has its roots in the starting of America,” said Samuel Myers, an economist at the University of Minnesota.

JIm Crow laws put in place shortly after the Civil War also kept black people impoverished.

A more recent and complex cause was the systemic exclusion of black people from the U.S. housing market beginning in the 1920. Housing is one of the main engines of accumulating wealth in America.

Restrictive covenants were put on houses that limited where black people could live, said Tauheed. These covenants, combined with discriminatory credit policies, kept black people from building wealth.

At the same time, government policies were put in place to assist whites to build wealth through housing.

For instance, in Minneapolis, where the current protests began after the death of George Floyd while being detained by police, white Americans first benefitted from the Homestead Act.

Then white soldiers coming home from World War II were given cheap loans to buy homes in the surrounding suburbs. These neighborhoods were off limits to black people, said Myers.

And the only prosperous black community in the city was razed to the ground to build a highway to St. Paul, he added.

“My feeling is until and unless white people acknowledge that their wealth holdings and therefore the wealth gap is attributable to unearned entitlements from public policy, then we’re not going to even have a conversation” about solutions to the wealth gap, Professor Myers said.

The solutions

Black economists think that reparations — the direct payment to descendents of former slaves — would narrow the wealth gap.

But they are under no illusion that this policy could be easily become law as blacks make up 12% of the population.

Reparations “run into conflict with the American mythology of how you get ahead, which says that it’s all individual effort,” said Professor Mason from Florida State.

Sen. Cory Booker, the black U.S. Senator from New Jersey, pushed for “baby bonds” during his brief run for the presidency last year. The accounts, presented at birth, would be seeded with $1,000 and receive up to $2,000 extra every year depending on family income. They could only be used once the child reached the age of 18, with the funds limited for paying college, a home, or to start a business.

This idea is race-neutral and poor whites would benefit the most from such a program, Professor Myers noted.

“I don’t really think in the final analysis baby bonds are going to dramatically narrow the wealth gap but I’d be really happy if I’m wrong,” Myers said.

See also: Black Americans, their lives and livelihoods on the line, suffer most from the pandemic



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