Bank of N.T. Butterfield & Son (NYSE:NTB) Has Announced A Dividend Of $0.44
The Bank of N.T. Butterfield & Son Limited's (NYSE:NTB) investors are due to receive a payment of $0.44 per share on 22nd of May. Based on this payment, the dividend yield on the company's stock will be 7.0%, which is an attractive boost to shareholder returns.
Check out our latest analysis for Bank of N.T. Butterfield & Son
Bank of N.T. Butterfield & Son's Payment Expected To Have Solid Earnings Coverage
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.
Bank of N.T. Butterfield & Son has a good history of paying out dividends, with its current track record at 7 years. Past distributions do not necessarily guarantee future ones, but Bank of N.T. Butterfield & Son's payout ratio of 38% is a good sign for current shareholders as this means that earnings decently cover dividends.
The next year is set to see EPS grow by 2.0%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 40% by next year, which is in a pretty sustainable range.
Bank of N.T. Butterfield & Son Doesn't Have A Long Payment History
It is great to see that Bank of N.T. Butterfield & Son has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from an annual total of $0.40 in 2016 to the most recent total annual payment of $1.76. This means that it has been growing its distributions at 24% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.
Bank of N.T. Butterfield & Son Could Grow Its Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Bank of N.T. Butterfield & Son has impressed us by growing EPS at 9.8% per year over the past five years. Bank of N.T. Butterfield & Son definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Bank of N.T. Butterfield & Son Looks Like A Great Dividend Stock
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 2 warning signs for Bank of N.T. Butterfield & Son you should be aware of, and 1 of them is a bit concerning. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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