July 1 (Reuters) - Bank of America ( BAC ) hiked its

quarterly dividend to 28 cents per share on Tuesday, less than a

week after passing the U.S. Federal Reserve's annual stress

test.

The new dividend will be paid beginning in the third

quarter. The bank's previous dividend was 26 cents per share.

The biggest U.S. lenders have enough capital to withstand a

hypothetical severe economic and market turmoil, the Fed said

last week. The aggregate decline in banks' common equity tier 1

ratio, a gauge of high-quality capital, was milder this year

compared to 2024.

While the clean bill of health may prompt banks to reduce

excess capital via buybacks and dividends, they would likely be

cautious until the economic outlook becomes clearer, a Moody's

report said on Tuesday.

(Reporting by Niket Nishant in Bengaluru; Editing by Maju

Samuel and Shinjini Ganguli)