Bank of New York Mellon Corp's Dividend Analysis
Assessing the Sustainability and Growth of BK's Dividend
Bank of New York Mellon Corp (NYSE:BK) recently announced a dividend of $0.42 per share, payable on 2024-02-02, with the ex-dividend date set for 2024-01-19. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Bank of New York Mellon Corp's dividend performance and assess its sustainability.
What Does Bank of New York Mellon Corp Do?
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Bank of New York Mellon Corp is a global investment company involved in managing and servicing financial assets throughout the investment lifecycle. The bank provides financial services for institutions, corporations, and individual investors and delivers investment management and investment services in 35 countries and more than 100 markets. BNY Mellon is the largest global custody bank in the world, with about $44.3 trillion in under custody and administration (as of Dec. 31, 2022), and can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute, or restructure investments. BNY Mellon's asset-management division manages about $1.8 trillion in assets.
A Glimpse at Bank of New York Mellon Corp's Dividend History
Bank of New York Mellon Corp has maintained a consistent dividend payment record since 1985, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 2010, earning it the title of a dividend achiever, reserved for companies with at least 14 consecutive years of dividend increases. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down Bank of New York Mellon Corp's Dividend Yield and Growth
As of today, Bank of New York Mellon Corp currently has a 12-month trailing dividend yield of 2.89% and a 12-month forward dividend yield of 3.07%, suggesting an expectation of increased dividend payments over the next 12 months. Over the past three years, the company's annual dividend growth rate was 6.40%, which increased to 9.70% per year over a five-year horizon. Over the past decade, the annual dividends per share growth rate stands at an impressive 11.10%. Based on the dividend yield and five-year growth rate, the 5-year yield on cost of Bank of New York Mellon Corp stock as of today is approximately 4.59%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. As of 2023-12-31, Bank of New York Mellon Corp's dividend payout ratio is 0.40, indicating a balanced approach to dividend distribution and earnings retention. Bank of New York Mellon Corp's profitability rank is 6 out of 10 as of 2023-12-31, suggesting fair profitability. The company's consistent positive net income over the past decade further solidifies its financial stability.
Growth Metrics: The Future Outlook
Bank of New York Mellon Corp's growth rank of 6 out of 10 suggests a fair growth outlook. However, the company's revenue and earnings growth rates indicate some challenges. Bank of New York Mellon Corp's revenue has grown at an average rate of 4.90% per year, underperforming approximately 52.54% of global competitors. The 3-year EPS growth rate has decreased by about -7.70% per year on average, underperforming approximately 67.49% of global competitors. Additionally, the 5-year EBITDA growth rate of -1.00% underperforms approximately 68.08% of global competitors, highlighting areas for potential improvement.
Next Steps
In conclusion, while Bank of New York Mellon Corp has a strong history of dividend payments and has demonstrated growth in its dividend per share over the years, investors should consider the company's moderate payout ratio, fair profitability, and mixed growth metrics when evaluating the sustainability of future dividends. With a balanced approach to dividends and earnings retention, the company appears to be maintaining a prudent financial strategy. However, the underperformance in revenue and earnings growth compared to peers suggests that investors should keep an eye on the company's strategic initiatives to improve these metrics. For those seeking to diversify their portfolio with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
