Bank of N.T. Butterfield & Son (NYSE:NTB) Is Due To Pay 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 22nd of August, with investors receiving $0.44 per share. This means the annual payment is 5.2% of the current stock price, which is above the average for the industry.

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

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 a good history of paying out dividends, with its current track record at 6 years. Past distributions do not necessarily guarantee future ones, but Bank of N.T. Butterfield & Son's payout ratio of 50% is a good sign for current shareholders as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 55.5%. Analysts forecast the future payout ratio could be 36% over the same time horizon, which is a number we think the company can maintain.

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 28% 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.

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. Bank of N.T. Butterfield & Son has impressed us by growing EPS at 18% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

Bank of N.T. Butterfield & Son Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 Bank of N.T. Butterfield & Son that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.