How Can I Sign New York Banking Word

How can i industry sign banking new york word now

would you like to invest in a business that's been making money for more than two centuries like the idea of sleeping well at night knowing your investment almost can't lose want to collect market beating dividend income while you sleep well at night then you have to check out today's video he is a best-selling author 30 year old jason fever has a plan this guy retired at only 33 years old i don't know if i know too many people have accomplished something like that he's really kind of a guru when it comes to passive income [Music] before we get into today's content please give us a big thumbs up if you find value in our videos helps us to get the word out and grow the channel i'd really appreciate it i want to tell you about a high quality stock that pays big growing reliable dividends these growing dividends are funded by growing profit because this business is a powerhouse financial firm that provides critical services behind the global banking infrastructure i'm not talking about your local community bank here this isn't where you deposit your paycheck this is a global bank that has almost 40 trillion dollars in assets under custody and administration i personally invested in stocks just like this one on my way to going from below brook at age 27 to financially free at 33. best of all the stock looks undervalued right now price is what you pay but values what you get why is that important because buying a dividend growth stock when it's undervalued should provide for a higher yield greater long-term total return potential and reduced risk with this in mind i want to share with you an opportunity i recently came across in shares of bank of new york melloncorp which appear to be trading at a significant discount today bank of new york mellon corp stock ticker bk is a global financial services company founded in 1784 bank of new york mellon is now a 36 billion dollar by market cap financial beast that employs almost 50 000 people the bank provides a range of investment management and financial services in more than 100 markets across 35 countries operations are split across two principal business segments investment services and investment management these two segments contain the bank's seven different business lines asset servicing pershing issuer services treasury services clearance and collateral management asset management and wealth management this is the largest global custody bank in the world with over 38 trillion dollars in assets under custody and administration they also have approximately 1.9 trillion dollars in assets under management the 16.5 billion dollar acquisition of mellon financial by bank of new york in 2007 created the bank of new york mellon that now exists the combined enterprise has morphed into a powerhouse bank that provides critical services behind the global banking infrastructure in particular bank of new york mellon specializes in institutional services which includes trade execution custody securities lending and clearance and settlement a broad array of accounting and administrative services are also available through industry consolidation and advancements towards sticky custody assets bank of new york mellon has built an enviable business model focused on scalable fee-based security servicing and fiduciary businesses indeed fee revenue accounted for 80 percent of fiscal year 2019 total revenue the bank's scale and largely fee-based business model positions them well to continue making money and paying out a growing dividend as it stands bank of new york mellon has increased its dividend for nine consecutive years and the five-year dividend growth rate is 12.3 percent this double-digit long-term dividend growth comes on top of a market beating yield of three percent that yield by the way is 110 basis points higher than the stock's own five-year average yield it's worth noting however that dividend growth is currently on pause while the bank has an incredible capability to grow its dividend through thick and thin they are sometimes prevented from doing so by outside forces the federal reserve stepping in with extreme stress tests and forbidding the increase of bank dividends during the pandemic is an example of that i expect the dividend to continue growing as soon as it's allowed in the meantime the dividend is protected by a very low payout ratio of 27.3 percent these dividend metrics are extremely solid across the board looking at business growth bank of new york mellon increased its revenue from 13.875 billion dollars in fiscal year 2010 to 15.434 billion dollars in fiscal year 2019. that's a compound annual growth rate of 1.19 not terribly impressive the last decade has been really tough for banks in general due to various factors like low interest rates and tough regulations while bank of new york mellon has a fee based business based on banking infrastructure they're still exposed to broader headwinds within banking meanwhile earnings per share grew from two dollars and six cents to 4.51 cents over this period which is a compound annual growth rate of 9.1 percent not only is this great but it's also been almost completely secular the bank tends to rack up year-over-year increases in earnings per share like clockwork there are substantial excess bottom line growth here which is largely thanks to big buybacks and a healthy expansion in margins regarding the buybacks the bank reduced its outstanding sure count by 22 percent over the last 10 years looking forward cfra believes that bank of new york mellon will compound his earnings per share at an annual rate of two percent over the next three years in my view this is a pessimistic take on the bank's near-term earnings growth potential cfra cites the persistence of low interest rates and overall economic contraction driven by covet 19 and competitive pressure in the asset servicing space as prime headwinds on the other hand diverse business lines a margin expansion story and the bank's positioning in a complex regulatory field all work to the company's benefit bank of new york mellon has been resilient throughout the pandemic their third quarter fiscal year 2020 report showed revenue down less than one percent year over year that's mostly because the fee revenue barely budged once the us economy starts to move again so will the bank low interest rates hurt the business model but i think they can do better than two percent earnings per share growth annually from here the prolific buybacks alone can drive a lot of earnings per share growth even off of flat revenue with a very low payout ratio i believe they'll be capable of easily delivering mid-single-digit dividend growth over the long run moving over to the balance sheet the bank has a solid financial position they have 381.5 billion dollars in total assets against 339.8 billion dollars in total liabilities the bank of new york mellon's long-term senior debt features credit ratings well into investment grade territory s p gives it an a a minus moody's aa2 and fitch double a also consider that warren buffett has given his seal of approval to this bank berkshire hathaway inc owns a long time position in bank of new york melbourne that's currently worth about 3 billion the bank's profitability is strong and margins have been expanding nicely over the last five years the firm is averaged annual net margin of 24.59 percent and annual return on equity of 10.07 i see this as a compelling way to play the value in banks without going head over skis into the headwinds from low interest rate the bank's unique business model and fee based structure offers a lot to like i want to reiterate that this company has been around for more than 230 years one of its co-founders was alexander hamilton you know one of the founding fathers of the united states they've more than proven their durability with global scale its positioning and banking infrastructure entrenched relationships around sticky assets and unique know-how around regulatory matters the bank does feature competitive advantages of course there are risks to consider regulation litigation and competition are omnipresent risks in every industry an environment with persistently low interest rates is a challenge for the bank ongoing downward pressure and fees across banking will likely somewhat stymie the company's growth trajectory the bank's asset management business faces pressures of its own from the rise of low-cost passive alternatives and the total economic fallout from the pandemic remains unknown any lasting economic scars will affect the bank overall i think this is a quality business with one of the all-time best track records for longevity at the right valuation it could be an attractive long-term investment with the stock down almost 20 year-to-date i think the valuation is now quite appealing the stock is trading hands for a price earnings ratio of nine that's less than half of the broader market's earnings multiple it's also way off of the stock's own five year average price earnings ratio of 15.3 keep in mind i'm not using adjusted earnings here these are gap numbers making things highly comparable at 0.9 times book value it's not even a book here the price to cash flow ratio of 10.7 is below its three year average of 12.8 and the yield as noted earlier is significantly higher than its own recent historical average i valued shares using a dividend discount model analysis i factored in a 10 discount rate and a long-term dividend growth rate of 7 that's well below both their 5-year dividend growth rate and their 10-year earnings per share growth rate but i think the drop is reasonable this dividend growth rate harkens back to what i wrote earlier about the bank's dividend growth potential from buybacks and the low payout ratio those two factors alone can propel plenty of dividend raises however moderating bottom line growth from the various challenges will also cap the upside the bank could certainly do better than this but i'd rather err on the side of caution the dividend discount model analysis gives me a fair value of 44.23 the reason i use a dividend discount model analysis is because a business is ultimately equal to the sum of all of the future cash flow it could provide the dividend discount model analysis is a tailored version of the discounted cash flow model analysis as it simply substitutes dividends and dividend growth for cash flow and growth it then discounts those future dividends back to the present day to account for the time value of money since the dollar tomorrow is not worth the same amount as a dollar today i find it to be a fairly accurate way to value dividend growth stocks morningstar rates bank of new york mellon as a four-star stock with a fair value estimate of 48. cfra rates bank of new york mellon as a three-star hold with a 12-month target price of forty dollars i came out almost exactly in the middle averaging the three numbers out gives us a final valuation of forty four dollars and eight cents which would indicate the stock is possibly eight percent undervalued here's the bottom line guys bank of new york melloncorp is a global financial powerhouse with roots that date back to the founding of the united states of america their longevity is unmatched with a market beating dividend double-digit long-term dividend growth a very low payout ratio and the potential that shares are 8 undervalued this could be an opportunity to load up on a buffet approved stock at a discount thanks so much for watching i hope you enjoyed today's video give us a like if you did and let us know in the comments what you think about this stock please make sure to subscribe to the channel and ring that notification bell so you don't miss out on new content also take a look at the description box below for some important links including a link to my personal stock portfolio this six figure portfolio which i call the fire fund generates enough passive dividend income for me to live off of it allowed me to retire in my early 30s i've made my portfolio entirely accessible over a patreon and i also post alerts there whenever i buy or sell a stock i put my money where my mouth is and i'm often invested in the same high quality dividend growth stocks that i make videos on over the years i've heard from thousands of investors who've been profiting from many the same exact stocks that i own so if you think this is something that you could benefit from as well check the link in the description to see my portfolio and start getting my buy and sell alerts i'll see you next time [Music] you