uploads///BK Dividends

Will BNY Mellon’s 12% Dividend Hike Please Investors?

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Jan. 13 2017, Updated 4:05 p.m. ET

Dividends

BNY Mellon (BK) hiked its dividend to $0.19 after the Federal Reserve approved its capital plans and cleared its stress test results. This dividend, which was effective starting in the third quarter, is a 12% hike from its previous dividend payout of $0.17. Further, the company also plans to buy back shares worth $2.7 billion, contingent in part on the company issuing $750 million of preferred stock. Bank of New York Mellon (BK) has regularly rewarded its shareholders through dividends and share buybacks. Between 2005 and 2008, the company paid a dividend of $0.20 per share, which was slashed to $0.09 during the 2009 recession. Post-recession, the company has gradually increased its dividends.

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Share repurchase plans

In 3Q16, BNY Mellon repurchased 11.6 million shares for a total cost $464 million. This is a reflection of the company’s confidence in its current valuations and long-term growth prospects.

US banks (XLF) have been repurchasing shares in order to boost their earnings per shares. Recently, JPMorgan (JPM), Citigroup (C), and Bank of America (BAC) increased their share buyback program.

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