Northern Trust (NASDAQ:NTRS) Is Due To Pay A Dividend Of US$0.70

By
Simply Wall St
Published
July 24, 2021
NasdaqGS:NTRS
Source: Shutterstock

Northern Trust Corporation (NASDAQ:NTRS) has announced that it will pay a dividend of US$0.70 per share on the 1st of October. This means the annual payment is 2.5% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Northern Trust

Northern Trust's Earnings Easily Cover the Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend was quite easily covered by Northern Trust's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Over the next year, EPS is forecast to expand by 20.3%. If the dividend continues on this path, the payout ratio could be 45% by next year, which we think can be pretty sustainable going forward.

historic-dividend
NasdaqGS:NTRS Historic Dividend July 24th 2021

Northern Trust Has A Solid Track Record

The company has an extended history of paying stable dividends. The first annual payment during the last 10 years was US$1.12 in 2011, and the most recent fiscal year payment was US$2.80. This works out to be a compound annual growth rate (CAGR) of approximately 9.6% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

We Could See Northern Trust's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see Northern Trust has been growing its earnings per share at 7.5% a 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.

Northern Trust Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Northern Trust might even raise payments in the future. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Northern Trust that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.

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This article by Simply Wall St is general in nature. 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.
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