BNY Mellon (BK) is a Buffett favorite with a reputation as a cash cow. It is also a growing company with a rising share price.
Notably, Hedgefellow estimates Berkshire Hathaway (NYSE: BRK.B) held 72.36 million shares of Bank of New York Mellon (BK) on 31 December 2021. Hedgefellow also estimates BNY Mellon (NYSE: BK) comprised 1.27% of Berkshire’s holdings at end of 2021.
BNY Mellon’s share price is growing. For example, Mr. Market paid $43.73 for BK on 22 February 2021 and $54.37 on 25 February 2022. Moreover, Mellon finished 2021 with more cash and revenue.
How Much Money is BNY Mellon making?
For example, BNY Mellon’s quarterly revenues grew from $3.797 billion on 31 December 2020 to $4.009 billion on 31 December 2021. Additionally, Bank of New York’s cash and short-term investments grew from $154.718 billion on 31 December 2020 to $171.342 billion.
Unfortunately, no cash flows for BNY were available on 31 December 2021. However, BNY Mellon reported a quarterly ending cash flow of $1.482 billion, a quarterly financing cash flow of $5.626 billion, and a quarterly operating cash flow of $54 million on 30 September 2021.
How much Cash Does BNY Mellon Generate?
Hence, BNY Mellon (NYSE: BK) can generate enormous amounts of cash. For example, Mellon reported a quarterly ending cash flow of $9.37 billion on 31 March 2021. The quarterly operating cash flow fell from $2.828 billion on 30 June 2021.
Conversely, BNY Mellon finished 2021 with less cash. For example, the cash and short-term investments fell from $211.506 billion on 31 December 2020 to $171.342 billion on 31 December 2021.
Additionally, BNY Mellon lost value in 2021. For instance, Mellon’s total assets fell from $469.633 billion on 31 December 2020 to $444.438 billion on 31 December 2021.
Why is BNY Mellon Shrinking?
Thus, BNY Mellon (BK) shrank in 2021. I consider this shrinkage odd because BNY Mellon’s primary businesses are servicing and managing the finances of institutions and high-net worth individuals.
To explain, the Bloomberg Billionaires Index estimates the combined fortunes of the 500 richest people on Earth grew by $1 billion in 2021. Moreover, the S&P 500 grew by 27% in 2021, CNN reports. Meanwhile, valuations on other assets such as cryptocurrencies soared in 2021.
Interestingly, Bloomberg estimates the world’s 500 richest people now have combined fortunes of $8.4 billion. Hence, BNY Mellon’s customers have more money than ever.
Thus, there is something very wrong with BNY Mellon’s business. It appears the bank is having a harder time servicing the rich. My guess is that many wealthy people are putting money into products BNY may not offer, for example cryptocurrency.
Is BNY Mellon a Value Investment?
I consider Bank of New York Mellon Corp (BK) a value investment because of its reasonable share price and enormous amounts of cash. However, the company is making less cash.
In addition, BNY Mellon is an excellent dividend stock. For example, BNY Mellon has scheduled five 34₵ quarterly dividends in the next year. Consequently, Mellon offered a forward dividend of $1.36 and a forward dividend yield of 2.53% on 25 February 2022.
Consequently, I consider BNY Mellon an interesting value investment with a good share price and dividend. If you can live with the falling value, BNY Mellon (BK) could be an excellent value and dividend stock.
Originally published at https://marketmadhouse.com on February 23, 2022.
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