Northern Trust (NASDAQ:NTRS) Is Due To Pay A Dividend Of $0.75

The board of Northern Trust Corporation (NASDAQ:NTRS) has announced that it will pay a dividend on the 1st of October, with investors receiving $0.75 per share. This makes the dividend yield 3.8%, which will augment investor returns quite nicely.

See our latest analysis for Northern Trust

Northern Trust's Earnings Will Easily Cover The Distributions

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

Northern Trust has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 54%, which means that Northern Trust would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 41.3% over the next 3 years. The future payout ratio could be 41% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Northern Trust Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was $1.20, compared to the most recent full-year payment of $3.00. This implies that the company grew its distributions at a yearly rate of about 9.6% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

Northern Trust May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Northern Trust hasn't seen much change in its earnings per share over the last five years.

Our Thoughts On Northern Trust's Dividend

Overall, a consistent dividend is a good thing, and we think that Northern Trust has the ability to continue this into the future. With shrinking earnings, the company may see some issues maintaining the dividend even though they look pretty sustainable for now. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Without at least some growth in earnings per share over time, the dividend will eventually come under pressure either from competition or inflation. Businesses can change though, and we think it would make sense to see what analysts are forecasting for the company. 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.