Bank of N.T. Butterfield & Son (NYSE:NTB) Has Affirmed Its Dividend Of US$0.44

The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) will pay a dividend of US$0.44 on the 24th of November. This makes the dividend yield 4.9%, which will augment investor returns quite nicely.

See our latest analysis for Bank of N.T. Butterfield & Son

Bank of N.T. Butterfield & Son's Dividend Is Well Covered By Earnings

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 quite a large proportion of earnings is being invested back into the business.

EPS is set to fall by 0.2% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio could be 65%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

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. Since 2016, the dividend has gone from US$0.40 to US$1.76. This means that it has been growing its distributions at 34% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Bank of N.T. Butterfield & Son has impressed us by growing EPS at 21% per year over the past five years. Bank of N.T. Butterfield & Son is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

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. The earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. As an example, we've identified 1 warning sign for Bank of N.T. Butterfield & Son that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.