Yahoo Finance Bank of N.T. Butterfield & Son (NYSE:NTB) Is Paying Out A 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 on the 21st of May, with investors receiving $0.44 per share. The dividend yield will be 5.2% based on this payment which is still above the industry average.
View our latest analysis for Bank of N.T. Butterfield & Son
Bank of N.T. Butterfield & Son's Dividend Forecasted To Be Well Covered By Earnings
If the payments aren't sustainable, a high yield for a few years won't matter that much.
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. Past distributions do not necessarily guarantee future ones, but Bank of N.T. Butterfield & Son's payout ratio of 39% is a good sign for current shareholders as this means that earnings decently cover dividends.
Over the next year, EPS is forecast to expand by 9.6%. If the dividend continues on this path, the future payout ratio could be 39% by next year, which we think can be pretty sustainable going forward.
Bank of N.T. Butterfield & Son Is Still Building Its Track Record
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 annual payment during the last 8 years was $0.40 in 2016, and the most recent fiscal year payment was $1.76. This implies that the company grew its distributions at a yearly rate of about 20% over that duration. 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's Growth Prospects Are Limited
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Bank of N.T. Butterfield & Son has only grown its earnings per share at 4.8% per annum over the past five years. If Bank of N.T. Butterfield & Son is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.
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. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. 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.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. 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. 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.
