Financial Services ETFs Deal With Bad BofA Dividend News

Prior to the release of the Federal Reserve’s CCAR results, research firm Markit “projected bank dividends would grow 49% in 2014, based on 23 of the subject banks within our forecasting universe,” but Markit now expects 2014 bank dividends to rise 36%.

However, that 36% growth rate was based on the assumption of 400% dividend growth from BofA. The ETFs mentioned here have sizable combined allocations to BofA and Citi. For example, IYF has a combined 8.9% weight to those names. That number jumps to 9.1% for VFH and almost 12% for XLF.

BofA said the calculation error “was related to the treatment of structured notes after the purchase of Merrill Lynch at the height of the financial crisis,” Reuters reported.

Financial Select Sector SPDR