Definitive Analysis
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The Bank of New York Mellon Corporation (BK)

Company Dividend Discount ModelIndustry: Asset ManagementSector: Financial Services

Valuation Snapshot

Stable Growth$116.16 - $222.45$158.81
Multi-Stage$108.95 - $119.15$113.96
Blended Fair Value$136.38
Current Price$108.96
Upside25.17%
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 Rate9.10%9.10%9.10%
Growth Rate3.90%4.90%5.90%
Fair Value$116.16$158.81$222.45
Upside / Downside6.61%45.75%104.16%

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 Rate9.10%9.10%9.10%
Growth Rate3.90%4.90%5.90%
Year 1 PV (M)1,979.851,998.912,017.96
Year 2 PV (M)2,484.012,532.062,580.56
Year 3 PV (M)2,935.613,021.203,108.43
Year 4 PV (M)3,338.523,468.923,603.10
Year 5 PV (M)3,696.363,877.704,066.09
PV of Terminal Value (M)64,168.6367,316.7070,587.14
Equity Value (M)78,602.9882,215.4885,963.28
Shares Outstanding (M)721.47721.47721.47
Fair Value$108.95$113.96$119.15
Upside / Downside-0.01%4.59%9.35%

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