BNY plans to raise quarterly dividend by 13% following stress test

NEW YORK - The Bank of New York Mellon Corporation (NYSE:BK) announced Tuesday its intention to increase its quarterly cash dividend by 13% from $0.47 to $0.53 per share, potentially starting in the third quarter of 2025, subject to board approval. This move continues BNY Mellon’s impressive track record of raising dividends for 14 consecutive years, while maintaining dividend payments for 55 years straight, according to InvestingPro data.

The announcement follows the Federal Reserve’s June 27 bank stress test results, which BNY said demonstrates its "resilient business model and strong balance sheet." The company’s Stress Capital Buffer requirement will remain at the regulatory floor of 2.5%, effective from October 1, 2025, to September 30, 2026. Trading at a P/E ratio of 14.6 with a current dividend yield of 2.06%, the stock has delivered a strong year-to-date return of 20%.

"The results of the Federal Reserve’s annual bank stress test demonstrate our strength and ability to support clients through extreme economic stress scenarios," said Robin Vince, Chief Executive Officer of BNY, in a press release statement.

BNY noted that it maintains authorization for share repurchases under its existing program announced in April 2024, with timing and amounts subject to the company’s capital position and market conditions.

As of March 31, 2025, BNY oversees $53.1 trillion in assets under custody and/or administration and $2.0 trillion in assets under management. With a market capitalization of $64.9 billion, InvestingPro analysis suggests the stock is currently undervalued, making it an interesting consideration for value investors.

The Bank of New York Mellon, which has operated for more than 240 years, serves over 90% of Fortune 100 companies and nearly all of the top 100 banks globally, according to the company’s statement.

In other recent news, Northern Trust has reiterated its commitment to independence following reports that Bank of New York Mellon expressed interest in a potential merger. Despite discussions between the CEOs of both companies, Northern Trust confirmed its intention to remain a standalone entity. Analyst Vivek Juneja from JPMorgan noted potential strategic benefits of a merger, particularly for BNY Mellon’s wealth management business, but emphasized the importance of deal pricing. Meanwhile, RBC Capital Markets’ Gerard Cassidy highlighted the complementary strengths of both firms, with a combined entity potentially overseeing over $3 trillion in assets under management.

In other developments, Bank of New York Mellon has issued $2 billion in senior notes, comprising fixed and floating rate notes due in 2028 and 2036. This financial activity is part of the bank’s ongoing strategies and compliance with securities regulations. Additionally, BNY Mellon announced leadership changes, with CEO Robin Vince set to become chairman in 2025, while Joe Echevarria will transition to lead independent director.

In analyst updates, Truist Securities downgraded BNY Mellon’s stock from Buy to Hold, though it raised the price target to $97. The firm acknowledged the bank’s strong performance and growth prospects but cited the need for reassessment following significant stock appreciation. Despite the downgrade, Truist maintains a positive long-term view of BNY Mellon’s diversified business model and growth potential in the Treasury market.

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