Bank of N.T. Butterfield & Son (NYSE:NTB) Has Affirmed Its Dividend Of $0.44
The board of The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) has announced that it will pay a dividend of $0.44 per share on the 11th of March. Based on this payment, the dividend yield on the company's stock will be 5.7%, 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.
Having paid out dividends for 8 years, Bank of N.T. Butterfield & Son has a good history of paying out a part of its earnings to shareholders. Based on Bank of N.T. Butterfield & Son's last earnings report, the payout ratio is at a decent 38%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Over the next 3 years, EPS is forecast to expand by 0.8%. The future payout ratio could be 39% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
Bank of N.T. Butterfield & Son Is Still Building Its Track Record
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2016, the annual payment back then was $0.40, compared to the most recent full-year payment of $1.76. This implies that the company grew its distributions at a yearly rate of about 20% over that duration. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
We Could See Bank of N.T. Butterfield & Son's Dividend Growing
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 seen EPS rising for the last five years, at 5.7% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Bank of N.T. Butterfield & Son's prospects of growing its dividend payments in the future.
Our Thoughts On Bank of N.T. Butterfield & Son's Dividend
Overall, a consistent dividend is a good thing, and we think that Bank of N.T. Butterfield & Son has the ability to continue this into the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. To that end, Bank of N.T. Butterfield & Son has 2 warning signs (and 1 which can't be ignored) we think you should know about. 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.
