JPMorgan Chase Outperforms Bank of America in Dividend Sustainability

JPMorgan Chase and Bank of America are two prominent banks that have recently raised their dividends. However, despite both stocks experiencing a decline in value over the past month, JPMorgan has a stronger track record of sustaining dividend growth during economic downturns.

The crisis history between the two banks is telling. In 2009, JPMorgan reduced its quarterly dividend from $0.38 to $0.05 but quickly recovered to as much as $0.25 in 2011. Bank of America, on the other hand, dropped to just $0.01 and remained there until 2013.

JPMorgan's capital cushion is another key factor that sets it apart from Bank of America. The bank has a CET1 ratio of 14.1%, significantly higher than Bank of America's 11.2%. This means JPMorgan has more room to continue raising its dividend during times of economic stress.

While Bank of America's earnings mix is spread across various income streams, including net interest income and deposits, it still relies heavily on trading revenue. In contrast, JPMorgan's reliance on Wall Street trading revenue can be volatile.