The Bank of New York Mellon Corporation’s (NYSE:BK) dividend will be increasing to US$0.34 on 9th of August. This takes the dividend yield to 2.6%, which shareholders will be pleased with.
Bank of New York Mellon’s Dividend Is Well Covered By Earnings
Impressive dividend yields are good, but this doesn’t matter much if the payments can’t be sustained. Before making this announcement, Bank of New York Mellon was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
The next year is set to see EPS grow by 10.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 33%, which is in the range that makes us comfortable with the sustainability of the dividend.
historic-dividendNYSE:BK Historic Dividend July 18th 2021
Bank of New York Mellon Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The first annual payment during the last 10 years was US$0.36 in 2011, and the most recent fiscal year payment was US$1.36. This means that it has been growing its distributions at 14% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
We Could See Bank of New York Mellon’s Dividend Growing
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Bank of New York Mellon has impressed us by growing EPS at 6.6% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
We Really Like Bank of New York Mellon’s Dividend
Overall, a dividend increase is always good, and we think that Bank of New York Mellon is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we’ve picked out 1 warning sign for Bank of New York Mellon that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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