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The Bank of New York Mellon Corporation (BK)

Company Dividend Discount ModelIndustry: Asset ManagementSector: Financial Services

Valuation Snapshot

Stable Growth$116.56 - $223.71$159.50
Multi-Stage$109.30 - $119.53$114.32
Blended Fair Value$136.91
Current Price$108.96
Upside25.65%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS3.78%5.90%1.871.751.611.561.551.551.461.251.081.05
YoY Growth--6.81%8.33%3.46%0.81%-0.27%6.46%16.76%15.81%2.37%0.00%
Dividend Yield--2.23%3.07%3.55%3.14%3.27%4.61%2.83%2.42%2.28%2.86%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)5,243.00
(-) Cash Dividends Paid (M)1,419.00
(=) Cash Retained (M)3,824.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)1,048.60655.38393.23
Cash Retained (M)3,824.003,824.003,824.00
(-) Cash Required (M)-1,048.60-655.38-393.23
(=) Excess Retained (M)2,775.403,168.633,430.78
(/) Shares Outstanding (M)721.47721.47721.47
(=) Excess Retained per Share3.854.394.76
LTM Dividend per Share1.971.971.97
(+) Excess Retained per Share3.854.394.76
(=) Adjusted Dividend5.816.366.72
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate3.90%4.90%5.90%
Fair Value$116.56$159.50$223.71
Upside / Downside6.98%46.38%105.32%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)5,243.005,499.805,769.186,051.756,348.166,659.106,858.87
Payout Ratio27.06%39.65%52.24%64.83%77.41%90.00%92.50%
Projected Dividends (M)1,419.002,180.773,013.753,923.104,914.305,993.196,344.45

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate3.90%4.90%5.90%
Year 1 PV (M)1,980.181,999.242,018.29
Year 2 PV (M)2,484.832,532.892,581.42
Year 3 PV (M)2,937.073,022.693,109.97
Year 4 PV (M)3,340.733,471.213,605.48
Year 5 PV (M)3,699.413,880.904,069.44
PV of Terminal Value (M)64,411.7267,571.7270,854.55
Equity Value (M)78,853.9382,478.6586,239.15
Shares Outstanding (M)721.47721.47721.47
Fair Value$109.30$114.32$119.53
Upside / Downside0.31%4.92%9.70%

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