Bank of America Has Cut Its Share Count by Nearly a Third in 10 Years. $10,000 Invested Then Is Worth About $40,000 Now.

With $3.4 trillion in total assets, Bank of America (NYSE: BAC) is the second-largest financial services institution in the U.S. That scale, paired with strong industry positions in various end markets, partly explains why the business has been consistently profitable. Over the last 10 years, Bank of America has posted an average quarterly net margin of 20.5%. This helps fund its capital allocation policy.

That includes returning money to investors in the form of buybacks. This bank stock has reduced its outstanding share count by nearly a third in the past decade. If you invested $10,000 in Bank of America back then, you'd have about $40,000 today.

Image source: The Motley Fool.

Capital returns are a key part of the story

During the third quarter, which ended on Sept. 30, Bank of America bought back $6 billion of stock. That brings its total in 2026 to $19.2 billion. That amounts to 5.2% of the company's entire market cap.

The outstanding share count now sits at 6.9 million. That's down 32% from exactly 10 years ago. This contributed to diluted earnings per share rising 122% during that time.

The company also paid $2.2 billion in dividends during the quarter. That supports a healthy dividend yield of 2.45%. Compared to the 1.05% yield of the S&P 500 index, this is quite attractive. Additionally, Bank of America's quarterly dividend went from $0.075 in Q3 2016 to $0.32 in the most recent quarter, translating to a notable 327% increase.

In the past decade, the stock produced a total return of 304% (as of Oct. 16). That would've grown a $10,000 starting sum into $40,400 today. This is a respectable showing, to be sure. However, it falls just short of the overall stock market's 328% total return that would've turned that same $10,000 into $42,800.

Should you buy Bank of America stock right now?

There's no downplaying just how critical a leadership team's capital allocation policy is. Besides reinvesting in the business to maintain or grow operations, engaging in mergers and acquisitions, or paying down debt, management can return capital to investors via buybacks and dividends. As we've seen with Bank of America, this has a meaningful effect on the return profile.

This is a high-quality business that's endorsed by Warren Buffett and Berkshire Hathaway, as the conglomerate owns 6.9% of the bank. With the stock trading 19% off its peak, the valuation multiple has compressed. Investors can buy shares at a price-to-earnings ratio of 12.5, which is below the trailing 10-year average of 13.1.

Bank of America is an advertising partner of Motley Fool Money. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.