Why Bank of America Stock Crushed it Last Year

2025 will go down in history as a banner year for U.S. banking stocks. Bank of America (NYSE: BAC), did particularly well, with its shares rising by more than 25% in value across those 365 days.

Strong quarterly results throughout the year, yet another solid showing in the Federal Reserve's (Fed) annual bank stress tests, and a top-level managerial reshuffle convinced investors that the lender was on the path to continued prosperity. Here's a brief year in review for the big bank.

On a constant upswing

By and large, banks operate cyclical businesses. For the most part, when an economy is thriving, the sector tends to do well -- businesses and individuals are more prone to take out loans and swipe their credit cards for purchases (both important revenue drivers for banks).

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This is reflected in all four of Bank of America's quarterly earnings reports published in 2025. In each, the lender improved both total revenue and profitability on a year-over-year basis. Compounding that, in all of those frames, it beat the consensus bottom-line analyst estimate.

That momentum was helped by the company's performance in the stress tests. Hardly for the first time, it aced this year's exam, with the Fed finding that it could survive even the regulator's most dire theoretical economic scenario. While this wasn't a surprise given Bank of America's successful history with the tests, it buoyed the buy case for its stock.

We can say the same for the dividend raise management subsequently announced, accompanied by a large-scale stock buyback program. The dividend was bumped nearly 8% higher to a quarterly payout of $0.28 per share, while the company's board of directors authorized a $40 billion share repurchase initiative to replace an expiring program.

Both of those moves show a commitment to keeping the bank's considerable investor base sweet. Shareholders appreciate stock-supporting moves like buybacks, and they're rarely displeased when one of their investments puts a few more coins into their pockets.

Speaking of dividends, at 2.1%, Bank of America's yield is presently the highest among the so-called big four U.S. lenders.

Planning for the future

Finally, in September Bank of America announced something of a top management reshuffle. It named a pair of seasoned executives, Dean Athanasia and Jim DeMare, as co-presidents of the company. It also tapped CFO Alastair Borthwick to serve as executive vice president.

In its press release trumpeting the move, the bank wrote that "Athanasia and DeMare will drive companywide initiatives focused on long-term growth and returns and oversee Bank of America's eight lines of business and their leaders, who remain unchanged."

This was widely -- and rightly, in my view -- taken as a comforting piece of succession planning by the now 66-year-old CEO Brian Moynihan. The last thing any large company, particularly a bank, needs is a chaotic scramble for new leadership when a long-serving chief exits.

All in all, there wasn't too much to be down about with Bank of America's 2025. The country's economy chugged along despite some setbacks, and the lender chugged right along with it. Those who feel 2026 should be just as prosperous, or better, for this country should do well by buying (or holding onto) Bank of America shares.

Bank of America is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.