Western Alliance Bancorporation (NYSE:WAL – Get Free Report) and Bank of America (NYSE:BAC – Get Free Report) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, valuation, profitability, institutional ownership, risk, analyst recommendations and earnings.
Dividends
Western Alliance Bancorporation pays an annual dividend of $1.68 per share and has a dividend yield of 2.2%. Bank of America pays an annual dividend of $1.28 per share and has a dividend yield of 2.5%. Western Alliance Bancorporation pays out 18.6% of its earnings in the form of a dividend. Bank of America pays out 30.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Western Alliance Bancorporation has increased its dividend for 5 consecutive years and Bank of America has increased its dividend for 11 consecutive years. Bank of America is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Western Alliance Bancorporation has a beta of 1.42, meaning that its stock price is 42% more volatile than the S&P 500. Comparatively, Bank of America has a beta of 1.21, meaning that its stock price is 21% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current ratings for Western Alliance Bancorporation and Bank of America, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Western Alliance Bancorporation | 0 | 4 | 12 | 0 | 2.75 |
| Bank of America | 0 | 6 | 18 | 1 | 2.80 |
Western Alliance Bancorporation presently has a consensus target price of $92.18, indicating a potential upside of 20.93%. Bank of America has a consensus target price of $62.82, indicating a potential upside of 24.16%. Given Bank of America’s stronger consensus rating and higher probable upside, analysts clearly believe Bank of America is more favorable than Western Alliance Bancorporation.
Earnings and Valuation
This table compares Western Alliance Bancorporation and Bank of America”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Western Alliance Bancorporation | $5.37 billion | 1.55 | $969.00 million | $9.05 | 8.42 |
| Bank of America | $191.57 billion | 1.85 | $30.51 billion | $4.21 | 12.02 |
Bank of America has higher revenue and earnings than Western Alliance Bancorporation. Western Alliance Bancorporation is trading at a lower price-to-earnings ratio than Bank of America, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
79.2% of Western Alliance Bancorporation shares are held by institutional investors. Comparatively, 70.7% of Bank of America shares are held by institutional investors. 2.8% of Western Alliance Bancorporation shares are held by insiders. Comparatively, 0.3% of Bank of America shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Profitability
This table compares Western Alliance Bancorporation and Bank of America’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Western Alliance Bancorporation | 17.34% | 13.50% | 1.07% |
| Bank of America | 16.80% | 12.15% | 0.97% |
Summary
Bank of America beats Western Alliance Bancorporation on 10 of the 18 factors compared between the two stocks.
About Western Alliance Bancorporation
Western Alliance Bancorporation operates as the bank holding company for Western Alliance Bank that provides various banking products and related services primarily in Arizona, California, and Nevada. It operates through Commercial and Consumer Related segments. The company offers deposit products, including checking, savings, and money market accounts, as well as fixed-rate and fixed maturity certificates of deposit accounts; demand deposits; and treasury management and residential mortgage products and services. It also provides commercial and industrial loan products, such as working capital lines of credit, loans to technology companies, inventory and accounts receivable lines, mortgage warehouse lines, equipment loans and leases, and other commercial loans; commercial real estate loans, which are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties; construction and land development loans for single family and multi-family residential projects, industrial/warehouse properties, office buildings, retail centers, medical office facilities, and residential lot developments; and consumer loans. In addition, the company provides other financial services, such as internet banking, wire transfers, electronic bill payment and presentment, funds transfer and other digital payment offerings, lock box services, courier, and cash management services. Further, the company holds certain investment securities, municipal and non-profit loans, and leases; invests primarily in low-income housing tax credits and small business investment corporations; and holds certain real estate loans and related securities. Western Alliance Bancorporation was founded in 1994 and is headquartered in Phoenix, Arizona.
About Bank of America
Bank of America Corporation, through its subsidiaries, provides banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide. It operates in four segments: Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking, and Global Markets. The Consumer Banking segment offers traditional and money market savings accounts, certificates of deposit and IRAs, non-interest and interest-bearing checking accounts, and investment accounts and products; credit and debit cards; residential mortgages, and home equity loans; and direct and indirect loans, such as automotive, recreational vehicle, and consumer personal loans. The GWIM segment provides investment management, brokerage, banking, and trust and retirement products and services; wealth management solutions; and customized solutions, including specialty asset management services. The Global Banking segment offers lending products and services, including commercial loans, leases, commitment facilities, trade finance, and commercial real estate and asset-based lending; treasury solutions, such as treasury management, foreign exchange, short-term investing options, and merchant services; working capital management solutions; debt and equity underwriting and distribution, and merger-related and other advisory services; and fixed-income and equity research, and certain market-based services. The Global Markets segment provides market-making, financing, securities clearing, settlement, and custody services; securities and derivative products; and risk management products using interest rate, equity, credit, currency and commodity derivatives, foreign exchange, fixed-income, and mortgage-related products. Bank of America Corporation was founded in 1784 and is based in Charlotte, North Carolina.
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