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

The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) has announced that it will pay a dividend of $0.44 per share on the 22nd of May. The dividend yield will be 7.0% based on this payment which is still above the industry average.

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

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

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Having paid out dividends for 7 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 38% is a good sign for current shareholders as this means that earnings decently cover dividends.

Looking forward, earnings per share is forecast to rise by 2.0% over the next year. If the dividend continues on this path, the future payout ratio could be 40% by next year, which we think can be pretty sustainable going forward.

Bank of N.T. Butterfield & Son Doesn't Have A Long Payment History

Bank of N.T. Butterfield & Son's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of $0.40 in 2016 to the most recent total annual payment of $1.76. This means that it has been growing its distributions at 24% 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 Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Bank of N.T. Butterfield & Son has been growing its earnings per share at 9.8% a 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. However, there are other things to consider for investors when analysing stock performance. To that end, Bank of N.T. Butterfield & Son has 2 warning signs (and 1 which is concerning) we think you should know about. 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.