Bank of New York Mellon Favors Expansion Over Dividends, Buybacks

On the day his company acquired PNC Financial's (NYSE: PNC) global investment servicing business for $2.31 billion, Bank of New York Mellon (NYSE: BK) CEO Bob Kelly said his company favors expansion over boosting its dividend or repurchasing shares.

Kelly claims that shareholders prefer the company's expansion plans over a dividend increase, but Kelly added "I do want to point out that our second favorite alternative is to raise the dividend... and that will be something that we will be thinking about in the second half of this year."

Kelly said the PNC purchase doesn't preclude future acquisitions, particularly international purchases. It would seem surprising that shareholders would favor Bank of New York Mellon spending more cash on acquisitions after the company slashed its quarterly dividend by 62% in July 2009 to 9 cents a share from 24 cents. The stock currently yields just 1.2%.