Bank of N.T. Butterfield & Son (NYSE:NTB) Is Due To Pay A Dividend Of US$0.44
The Bank of N.T. Butterfield & Son Limited's (NYSE:NTB) investors are due to receive a payment of US$0.44 per share on 14th of March. This means the annual payment is 4.3% 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 Earnings Easily Cover the Distributions
If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Bank of N.T. Butterfield & Son's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
Over the next year, EPS is forecast to expand by 8.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 59% by next year, which is in a pretty sustainable range.
Bank of N.T. Butterfield & Son Doesn't Have A Long Payment History
The dividend's track record has been pretty solid, but with only 5 years of history we want to see a few more years of history before making any solid conclusions. Since 2017, the first annual payment was US$0.40, compared to the most recent full-year payment of US$1.76. This means that it has been growing its distributions at 34% per annum over that time. 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.
The Dividend Looks Likely To Grow
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 23% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.
Bank of N.T. Butterfield & Son Looks Like A Great Dividend Stock
Overall, we like to see the dividend staying consistent, and we think Bank of N.T. Butterfield & Son might even raise payments in the future. 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.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Bank of N.T. Butterfield & Son that you should be aware of before investing. 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.
