Bank of N.T. Butterfield & Son (NYSE:NTB) Will Pay 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 14th of March. This means the annual payment is 4.8% of the current stock price, which is above the average for the industry.
See 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.
Having paid out dividends for 6 years, Bank of N.T. Butterfield & Son has a good history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Bank of N.T. Butterfield & Son's payout ratio of 41% is a good sign for current shareholders as this means that earnings decently cover dividends.
Looking forward, EPS is forecast to rise by 28.0% over the next 3 years. Analysts estimate the future payout ratio will be 34% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
Bank of N.T. Butterfield & Son Doesn't Have A Long Payment History
Bank of N.T. Butterfield & Son's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2017, the annual payment back then was $0.40, compared to the most recent full-year payment of $1.76. This works out to be a compound annual growth rate (CAGR) of approximately 28% a year over that time. Bank of N.T. Butterfield & Son has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.
The Dividend Has Growth Potential
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Bank of N.T. Butterfield & Son has been growing its earnings per share at 9.2% a year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.
Bank of N.T. Butterfield & Son Looks Like A Great Dividend Stock
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend 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. Taking the debate a bit further, we've identified 1 warning sign for Bank of N.T. Butterfield & Son that investors need to be conscious of moving forward. 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.
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