NBT Bancorp (NASDAQ:NBTB) Is Paying Out A Larger Dividend Than Last Year

NBT Bancorp Inc.'s (NASDAQ:NBTB) dividend will be increasing from last year's payment of the same period to $0.30 on 15th of September. The payment will take the dividend yield to 3.0%, which is in line with the average for the industry.

View our latest analysis for NBT Bancorp

NBT Bancorp's Dividend Forecasted To Be Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

NBT Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but NBT Bancorp's payout ratio of 32% is a good sign as this means that earnings decently cover dividends.

EPS is set to fall by 0.6% over the next 12 months. But if the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 34%, which would be comfortable for the company to continue in the future.

NBT Bancorp Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2012, the dividend has gone from $0.80 total annually to $1.20. This implies that the company grew its distributions at a yearly rate of about 4.1% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

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. We are encouraged to see that NBT Bancorp has grown earnings per share at 14% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for NBT Bancorp's prospects of growing its dividend payments in the future.

We Really Like NBT Bancorp's Dividend

Overall, a dividend increase is always good, and we think that NBT Bancorp is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for NBT Bancorp that investors should take into consideration. 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.