Bank of New York Mellon (NYSE:BK) Is Increasing Its Dividend To $0.37

The Bank of New York Mellon Corporation's (NYSE:BK) dividend will be increasing from last year's payment of the same period to $0.37 on 5th of August. This will take the dividend yield to an attractive 3.4%, providing a nice boost to shareholder returns.

See our latest analysis for Bank of New York Mellon

Bank of New York Mellon's Payment Expected To Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Having distributed dividends for at least 10 years, Bank of New York Mellon has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Bank of New York Mellon's payout ratio of 34% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 39.0%. The future payout ratio could be 32% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Bank of New York Mellon Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.52 in 2012, and the most recent fiscal year payment was $1.48. This means that it has been growing its distributions at 11% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

Dividend Growth May Be Hard To Achieve

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, Bank of New York Mellon has only grown its earnings per share at 3.4% per annum over the past five years. While EPS growth is quite low, Bank of New York Mellon has the option to increase the payout ratio to return more cash to shareholders.

We Really Like Bank of New York Mellon's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing 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 collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.