Bank of America expects high dividend

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Nothing brings out bullish analysts quite like a massive stock rally.

Bank of America stock has doubled so far in 2012, and there's room to run, according to the many bulls. The stock still trades at way less than its book value per share. Meredith Whitney is the latest to jump on the bandwagon.

"I have not seen an opportunity like this in four or five years," she told CNBC recently.

The big driver of all the good feelings in the analysts' ranks is the sense that the bank will return gobs of capital to shareholders soon. Few think that the Federal Reserve Board will stand in the way as it did last year. The bank is among the best capitalized in the industry and quite incented to boost its dividend as a way to boost its stock price.

One analyst notes that, "Once the dust finally settles from the financial crisis, most analysts, both inside the company and outside of it, believe that B of A will earn upwards of $30 billion a year if not more…That's roughly $3 per share. And assuming B of A ends up distributing a third of that, which is a conservative estimate, that equates to an annual dividend of $1. At the current price, that's a nearly 10% yield, and under this scenario, the underlying shares themselves could very realistically increase twofold if not more."

It will likely launch a share buyback as well. Whitney thinks that Bank of America could return up to $18 billion to shareholders over several years. The big question here is the extent to which this capital return scenario is way too rosy. There are lots of other risks out there, such as the risk of additional enforcement action and an unfavorable outcome to some high-risk litigation with the likes of MBIA as well as GSEs. And then there's the bad mortgage overhang.

The bank has built up $64 billion in six-month delinquent mortgages that have yet to enter foreclosure. That's more than twice the amount held by its top competitors collectively. There's plenty that can go wrong.

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