/biz/ - Business & Finance

When Bank of America was facing macroeconomic pressures and potential liquidity issues in 2011, Buffett approached the company's CEO with a financial lifeline. Berkshire wound up buying $5 billion worth of the company's preferred shares. Berkshire also secured stock warrants that would give it the right to purchase 700 million shares of the bank's common stock at a price of $7.14 per share.

In June 2017, Buffett's company cashed in those warrants. At the time, Bank of America stock was trading at $24.32 per share. Berkshire scored paper gains of roughly 240% with the move. But the long-term impact of this incredible investment has been even more significant.

Not only has Bank of America stock continued to climb since Buffett moved to exercise the stock warrants, but the financial giant has also delivered big hikes for its dividend.

With its current annual dividend of $0.96 per share, Berkshire is enjoying an annual yield of 13.4% on the 700 million shares it bought at $7.14 per share in the stock warrant deal. That's an astounding yield to be banking on an investment in a company as solid as present-day BofA.

Buffett's company is on track to receive roughly $990 million in dividend income from its Bank of America holdings over the next year. Given the likelihood that the bank will once again raise its payout this year, Berkshire's haul should be even higher.