The Bank of New York Mellon Corporation
) announced a 13% raise in its quarterly cash dividend. This
follows the Federal Reserve's approval of 2014 Comprehensive
Capital Analysis and Review (CCAR) or capital plan in March.
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With this, the quarterly dividend of BNY Mellon has increased to
17 cents per share. The dividend will be paid on May 7 to
stockholders of record as of Apr 25.
Notably, this is the third time since the financial crisis that
BNY Mellon has raised its cash dividend. Earlier, in 2013, the
dividend was hiked by 15% to 15 cents per share. Prior to that,
in 2011, BNY Mellon had announced a 44% increase in its dividend
to 13 cents per share.
Along with the latest dividend hike, BNY Mellon declared
dividends on its preferred stock for the quarter ending Jun 2014.
The company declared a dividend of $1,022.22 per share on its
Series A Preferred Stock, $1,300 per share on the Series C
Preferred Stock and $2,250 per share on the Series D Preferred
Stock. All these dividends will be paid on Jun 20 to shareholders
of record as of Jun 5.
Further, under its 2014 capital plan, BNY Mellon is authorized to
repurchase shares worth $1.74 million. The repurchase activity
will start from the second quarter of 2014 and continue through
the first quarter of 2015.
BNY Mellon had cleared the 2014 stress test and subsequently got
approval to enhance its capital deployment activities. The
company was one of the top performers in the recently concluded
stress test. Under a severely adverse stress test scenario, the
company's Tier 1 common capital ratio was 13.1%, way ahead of the
minimum requirement of 5%.
Additionally, BNY Mellon has an impressive business model which
enables it to strengthen its balance sheet and efficiently deploy
capital. The company's prudent expense management initiatives,
diversified revenue mix and strong capital ratios will likely aid
further growth. However, tepid economic recovery, a low
interest-rate environment and regulatory pressure could mar the
Similar to BNY Mellon, last week,
The PNC Financial Services Group, Inc.
) raised its quarterly common stock dividend by 9% to 48 cents
per share. This also followed the Fed's approval of its 2014
capital plan. We believe that several banks including
JPMorgan Chase & Co.
Bank of America Corp.
) will soon declare a raise in the payout as their 2014 capital
plans have also been approved by the Fed.
Currently, BNY Mellon carries a Zacks Rank #3 (Hold).