The Bank of New York Mellon Corporation (BK) announced that its capital deployment plan, submitted under the 2013 Comprehensive Capital Analysis and Review (CCARF) or the stress test, has received approval from the Federal Reserve. Consequently, the company authorized a new share repurchase program and is expected to shortly announce a dividend hike.
BNY Mellon authorized the repurchase of $1.35 million of its shares. The repurchase activity will begin in the second quarter of 2013 and will continue through the first quarter of 2014.
Further, BNY Mellon is contemplating a 15% hike in its quarterly dividend from 13 cents per share. The announcement is expected to be made in Apr 2013. These initiatives are expected to boost investors’ confidence.
Following the clearance of the 2012 stress test, the company enhanced shareholder value by a share repurchase plan of $1.16 billion of the outstanding stock. Alongside, it decided to maintain its quarterly dividend at 13 cents per share.
Also, in 2011, BNY Mellon declared a dividend hike and share repurchase plan after clearing the stress test. The bank increased its dividend by 44.4% to 13 cents per share. Also, it approved a $1.3 billion share repurchase program.
In Jan 2013, along with BNY Mellon, 18 other banks submitted capital plans to the Federal Reserve for the stress test. Of the 18, the Federal Bank approved capital plans of 16 banks including Wells Fargo & Co. (WFC) and Bank of America Corp. (BAC). Wells Fargo plans to increase its dividend by 20% to 30 cents per share. Further, it plans to increase its share repurchase in 2013.
On the other hand, BofA plans to repurchase stock worth $5 billion in 2014 and purchase $5.5 billion worth of preferred shares. However, it has no plans to increase its dividend payment.
SunTrust Banks, Inc. (STI) also announced its capital deployment plans. SunTrust authorized the repurchase of $200 million shares. Further, it plans to increase its dividend by 100% to 10 cents per share.
BNY Mellon currently retains a Zacks Rank #3 (Hold).
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