Bank of New York Mellon Corp. (BK) is a worldwide banking and financial services holding company, headquartered in New York City; it is one of the world's largest custodian banks and asset servicing companies, explains Vita Nelson, editor of DirectInvesting.
Through its Bank of New York predecessor, it 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.
Its current total market capitalization of $50.7 billion makes BK a large capitalization stock (a large-cap stock has a market capitalization value of more than $10 billion), and its long history of consistent dividend payments, revenues and earnings growth makes it a solid company.
It is considered a well-diversified business with a wide economic moat and a sustainable competitive advantage over its rivals that enjoys solid management and corporate culture.
According to Yahoo! Finance, consensus estimates call for the company to earn about $4.25 per share this year, up from $4.21 per share last year, and to go to about $4.62 per share next year.
The company has paid dividends to investors since 1785 and has increased its payments for 8 consecutive years. During the past five years it has increased its dividends at an average rate of 12.8%, and its quarterly payment of $0.28 per share currently provides a yield of 2.06%.
The stock exhibits a healthy Dividend Payout Ratio (DPR is the proportion of earnings paid out as dividends to shareholders) of 25.7%, which means the company is paying out only 25.7% of all its net income in dividends and is retaining a large percentage of earnings to reinvest or grow the business.
Its average DPR during the past five years is 26.0%. Its current Price to Earnings ratio of 16.1 is 10.8% below the S&P 500® index, and its Price to Book ratio of 1.3 is 55.3% below the index.
Technically, BK also looks attractive, trading 9.9% below its 52 weeks high, while it is forming a price consolidation pattern between $44 and $58, in which $44 is acting as a technical support level.
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, this company is an appropriate holding for investors who wish to build a holding over the long term.