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

The Bank of N.T. Butterfield & Son Limited's (NYSE:NTB) investors are due to receive a payment of $0.44 per share on 10th of March. This makes the dividend yield 4.5%, which will augment investor returns quite nicely.

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

Bank of N.T. Butterfield & Son's Payment Expected To Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

Bank of N.T. Butterfield & Son has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Bank of N.T. Butterfield & Son's payout ratio of 37% is a good sign for current shareholders as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 3.4%. Analysts estimate the future payout ratio will be 36% 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

The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 9 years was $0.40 in 2016, and the most recent fiscal year payment was $1.76. This means that it has been growing its distributions at 18% per annum 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.

Bank of N.T. Butterfield & Son Could Grow Its Dividend

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 8.0% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

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. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. 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. 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.