Mellon: Dividends Since 1785

10/23/2017 5:00 am EST


Vita Nelson

Founding Publisher and Editor, Moneypaper

Through its Bank of New York predecessor, Bank of New York Mellon Corp. (BK) is one of the three oldest banking corporations in the United States, and among the oldest banks in the world, having been established in June, 1784, notes Vita Nelson, dividend reinvestment expert and editor of DirectInvesting.

Bank of New York Mellon is considered a solid, well-diversified business with wide economic moat and a sustainable competitive advantage over its rivals. It enjoys a solid management and corporate culture.

Consensus estimates call for the company to earn about $3.53 per share this year, up from $3.16 per share last year, and to go to about $3.94 per share next year.

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It has paid dividends to investors since 1785. During the past five years, it has increased its dividends at an average rate of 9.4%, with its quarterly payment of $0.24 currently providing a yield of 1.53%.

BK still has room for significant dividend growth in the coming years, since the company's current dividend payout ratio (DPR), which is its dividend payments as a percentage of its earnings, is just 24%. Its average DPR during the past five years is 28%.

Its price to earnings ratio of 15.7 is 19.5% below its industry average and its Price to Book ratio of 1.5 is 25% below its industry average.

Technically (from a chart’s perspective) BK is trading 7.9% below its all-time high, 2.9% below its 52 weeks high, and $50 is acting as a technical support level.

The stock's beta (a measure of the volatility, or systematic risk in comparison to the market as a whole) is 1.17 compared to the S&P 500, so the stock is 17% more volatile than the market.

BK’s dividend reinvestment plan charges no fees for cash investing, dividend reinvestment, automatic investment or termination of the plan. With the stock being fundamental and technically attractive, it may offer an entry point for investors with a longer-term investment horizon.

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