BNY Mellon Stock Touches All-Time High: Should You Still Invest?

The Bank of New York Mellon Corporation BK stock, popularly known as BNY Mellon, has performed remarkably well so far this year. The stock touched its all-time high of $93.79 during last day’s trading session to finally close at $93.25, rising 21.4% year to date.

The performance of almost all major banks has improved recently following the clearance of the 2025 stress test. BNY Mellon’s performance has, in fact, been better than its close peers, BankUnited Inc. BKU and KeyCorp KEY. Also, BK has outperformed the industry’s 7% rise and the S&P 500’s 6.2% growth in the same time frame.

YTD Price Performance

Does BK stock have more upside left despite hitting a new 52-week high? Let us find out.

Factors Driving BNY Mellon Stock

Relatively Higher Interest Rates: Supported by higher interest rates, BNY Mellon has witnessed improvements in its net interest income (NII) and net interest margin (NIM). While the company’s NII declined in 2020 and 2021 because of lower interest rates and in 2024 due to higher funding costs, the metric recorded a five-year (ended 2024) compound annual growth rate (CAGR) of 6.2%. The upward momentum for NII continued in the first quarter of 2025.

Likewise, NIM has been witnessing a rising trend since the second quarter of 2024. Given that interest rates are expected to remain high for some time in the near term, BK’s NII and NIM will be positively impacted as funding costs come down.

Buyouts & Expansion Efforts: BNY Mellon has been trying to gain a foothold in foreign markets and is undertaking several growth initiatives, including launching new services, digitizing operations and making buyouts.

In November 2024, the company acquired Archer, while in September, it announced plans to launch Alts Bridge. In 2021, BK, through its subsidiary, acquired Optimal Asset Management.

In the first quarter of 2025, non-U.S. revenues constituted 33% of BK’s total revenues. Given the huge growth potential of overseas securities markets and a rise in complex new securities, the long-term growth prospects of the industry are encouraging. BNY Mellon’s international revenues are expected to continue improving as the demand for personalized services rises across the globe.

The BNY platform’s operating model is likely to drive the top line through leveraging technology and boosting fee revenues. This will enable the company to achieve higher operating leverage over time.

Revenue Estimates

Solid Balance Sheet Position: As of March 31, 2025, BNY Mellon had total debt of $53.1 billion, significantly lower than its cash and due from banks, and interest-bearing deposits of $107.7 billion.

The company maintains a stable outlook and investment-grade long-term senior debt ratings of Aa3, A and AA- from Moody’s, S&P Ratings and Fitch Ratings, respectively. Thus, given its solid liquidity position, BNY Mellon will likely be able to continue meeting debt obligations in the near term, even if the economic situation worsens.

Efficient Capital Deployments: BNY Mellon’s capital distribution activities have been impressive. Following the clearance of the 2025 stress test, the company intends to increase its quarterly cash dividend 13% to 53 cents per share in the third quarter of 2025, subject to board approval.

After clearing the 2024 stress test, the company hiked its quarterly dividend 12%. Prior to that, it hiked dividends 14% in July 2023 and 9% in July 2022.

In the last five years, BNY Mellon hiked its dividend four times. The company currently has a dividend payout ratio of 30% and a 5-year annualized growth rate of 10.57%.

Additionally, BK has an efficient share repurchase plan in place. In April 2024, it announced a share repurchase program worth $6 billion. As of March 31, 2025, $4.6 billion worth of authorization was available. BNY Mellon expects to return 100% or more of its earnings to shareholders in 2025 after having returned 102% last year and 123% in 2023.

What’s Hurting BK’s Growth

Elevated Operating Expenses: While BNY Mellon’s cost-saving initiatives helped it lower expenses over the past several years, the metric has been increasing of late. Non-interest expenses saw a five-year (ended 2024) CAGR of 3.1%, with the uptrend persisting in the first three months of 2025.

Expense Growth Trend

In 2024, the company increased investments in new client solutions, technology and people as part of its multi-year transformation program. Thus, given its transformation plan, inflationary pressure and efforts to upgrade operations, overall costs are expected to remain elevated.

Fee Income Concentration: BNY Mellon’s largest source of revenues is fee income, which constituted 71% of total revenues in the first quarter of 2025. The metric witnessed a five-year (2019-2024) CAGR of just 0.6%. This was mainly due to the significant volatility in the capital markets, which is worrisome and casts doubt on the sustainability of robust growth in the future.

Also, concentration risk from higher dependence on fee-based revenues could significantly hurt the company’s financial position if there is any change in individual investment preferences, regulatory amendments or a slowdown in capital markets activities.

Final Thoughts on BNY Mellon Stock

While rising expenses due to inflationary pressure and technological investments, and BNY Mellon’s substantial reliance on fee revenues are major near-term headwinds, the company’s global expansion efforts and a solid balance sheet position are likely to keep supporting growth. Its business transformation plan and strategic buyouts will likely aid the top line.

Analysts seem to be bullish regarding BNY Mellon’s earnings growth prospects. Over the past 60 days, the Zacks Consensus Estimate for the company’s 2025 and 2026 earnings has moved upward. The estimates reflect year-over-year growth rates of 12.9% for 2025 and 13.2% for 2026.

Earnings Estimate Revision

Thus, given its fundamental strength and positive earnings estimate revisions, the BNY Mellon stock looks like an attractive investment option now. Despite touching an all-time high, it seems that the stock has some upside potential left.

Currently, BNY Mellon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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