Bank of N.T. Butterfield & Son (NYSE:NTB) Is Paying Out A Dividend Of $0.44
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 22nd of November. This makes the dividend yield 7.0%, which will augment investor returns quite nicely.
View our latest analysis for Bank of N.T. Butterfield & Son
Bank of N.T. Butterfield & Son's Payment Expected To Have Solid Earnings Coverage
If the payments aren't sustainable, a high yield for a few years won't matter that much.
Bank of N.T. Butterfield & Son has a good history of paying out dividends, with its current track record at 7 years. Taking data from its last earnings report, calculating for the company's payout ratio of 37%shows that Bank of N.T. Butterfield & Son would be able to pay its last dividend without pressure on the balance sheet.
EPS is set to fall by 0.1% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 38% over the same time period, which is in a pretty comfortable range.
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 24% 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.
Bank of N.T. Butterfield & Son Could Grow Its Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Bank of N.T. Butterfield & Son has impressed us by growing EPS at 7.8% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
In Summary
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen 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. Case in point: We've spotted 2 warning signs for Bank of N.T. Butterfield & Son (of which 1 makes us a bit uncomfortable!) you should know about. Is Bank of N.T. Butterfield & Son not quite the opportunity you were looking for? Why not check out our selection of top 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.
