Northern Trust (NASDAQ:NTRS) Will Pay A Dividend Of $0.75

Northern Trust Corporation's (NASDAQ:NTRS) investors are due to receive a payment of $0.75 per share on 1st of January. Based on this payment, the dividend yield will be 2.7%, which is fairly typical for the industry.

Check out our latest analysis for Northern Trust

Northern Trust's Earnings Will Easily Cover The Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Northern Trust has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Northern Trust's payout ratio of 37% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 13.0%. Analysts forecast the future payout ratio could be 38% over the same time horizon, which is a number we think the company can maintain.

Northern Trust Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from $1.24 total annually to $3.00. This means that it has been growing its distributions at 9.2% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

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, Northern Trust has only grown its earnings per share at 4.0% per annum over the past five years. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

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. All of these factors considered, we think this has solid potential as a dividend stock.

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. To that end, Northern Trust has 2 warning signs (and 1 which doesn't sit too well with us) 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.