3. The Bank of New York Mellon Corporation (NYSE:BK)
Dividend Yield as of September 26: 3.74%
GAMCO Investors’ Stake Value: $87,612,000
The Bank of New York Mellon Corporation (NYSE:BK) is a New York-based investment banking holding company that provides related services to its consumers. The company has been a part of GAMCO Investors’ portfolio since 2012. At the end of Q2 2022, the hedge fund owned over 2.1 million shares in the company, worth over $87.6 million. The company accounted for 0.96% of the fund’s 13F portfolio.
On July 15, The Bank of New York Mellon Corporation (NYSE:BK) hiked its quarterly dividend by 8.8% to $0.37 per share. This marked the company’s 11th consecutive year of dividend growth. The company has been making uninterrupted dividends to shareholders for the past 21 years. As of September 26, the stock’s dividend yield came in at 3.74%.
In August, Deutsche Bank lifted its price target on The Bank of New York Mellon Corporation (NYSE:BK) to $46 and maintained its Hold rating on the shares, as asset managers are seeing growth due to the sector rebound post-pandemic. The firm also highlighted the sector’s strong fundamentals.
At the end of June 2022, 38 hedge funds in Insider Monkey’s database owned stakes in The Bank of New York Mellon Corporation (NYSE:BK), down from 54 in the previous quarter. These stakes are collectively valued at over $3.6 billion. With over $3 billion worth of stakes, Berkshire Hathaway owned the largest position in the company in Q2.
Ariel Investments mentioned The Bank of New York Mellon Corporation (NYSE:BK) in its Q4 2021 investor letter. Here is what the firm has to say:
“Rising interest rates, after a surprisingly long period of low absolute rates and negative “real” rates, will create a headwind. While there has been much debate about the cause of these low rates, we believe the most important factor has been the $120 billion in monthly federal reserve open market bond purchases and the accumulation of an $8 trillion balance sheet. The former will end, and the latter will shrink. It is not just the Fed that has aggressively purchased bonds, bidding up prices and lowering yields. Bond traders and hedge fund managers have added to positions, confident that being on the same side as the Fed was the wise place to be. Now as the Fed is about to become a seller of bonds rather than a buyer, Wall Street’s “smart money” is likely to follow suit. Against this backdrop, fixed income securities and bond substitutes such as high dividend paying utilities and absolute return hedge funds are substantially overpriced and are not likely to produce attractive returns going forward.
This expectation of a reversion to the mean for interest rates helped 2021 performance, though not as much as we had hoped. The yield on the U.S. 10-year Treasury did indeed increase from +0.92% at the beginning of the year to +1.52% at year-end. An underreported story was the poor performance of bonds last year. The Barclays Aggregate Index declined -1.67% for the year ending December compared to a return of +28.71% for equities as measured by the S&P 500. Interest rates have continued to climb in 2022 with the 10-year Treasury at +1.79% as we go to print. This move higher in rates has contributed to our good, early start to 2022. Smaller positions in The Bank of New York Mellon Corporation (BK) also benefited from higher rates, principally with their ability to invest customer cash.”
