If You'd Invested $1,000 in BAC 5 Years Ago, Here's How Much You'd Have Today

Key Points

• The ubiquitous lender has delivered reliably for shareholders over the years.

• In many ways, it's a proxy for the broader domestic economy it lends to.

• 10 stocks we like better than Bank of America ›

Throughout this country, Bank of America (NYSE: BAC) branches are as common a sight as outlets of your favorite coffee chain or supermarket. The lender is one of the "Big Four" U.S. banks, alongside JPMorgan Chase, Wells Fargo, and Citigroup. As such, it's an important mover of the domestic economy.

Does it belong in your portfolio, however? Let's take a look at how the stock has performed over time, and how attractive it is as an investment.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Lending to America

Since Bank of America is something of a proxy for our economy, its performance over the past five years is in line with that classic proxy for the stock market, the S&P 500 index. A $1,000 investment in the bank made five years ago would have resulted in a total return (i.e., share-price appreciation plus dividends) of $2,010 today, not too far south from the $2,160 under the same conditions for the index.

Image source: Getty Images.

That's an accomplishment because banking is a tricky business that's full of risk. After all, lending to a person or institution money, now and forever the main activity of banks, is always a bit of a gamble. It isn't easy to grow core fundamentals and land well in the black quarter after quarter, year after year.

This bank is to be commended for regularly posting growth in key metrics. In its most recently reported quarter, for instance, the lender grew its revenue, net of interest expense, by 4% year over year, to $26.5 billion, and headline net income by 3% to $7.1 billion.

Comforting and reliable

Bank of America isn't the most dynamic bank among the Big Four -- that honor belongs to JPMorgan Chase -- nor is it the one that's changing most dramatically for the better (wave to the people, Wells Fargo). Yet it's steady and reliable and constantly delivers for its shareholders. Its stock is a solid investment with more growth potential, as long as the economic cycle is in its favor.

Should you invest $1,000 in Bank of America right now?

Before you buy stock in Bank of America, consider this:

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Bank of America is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.