Northern Trust (NASDAQ:NTRS) Will 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 April, with investors receiving $0.75 per share. This makes the dividend yield 3.1%, which will augment investor returns quite nicely.

See our latest analysis for Northern Trust

Northern Trust's Earnings Will Easily Cover The Distributions

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

Northern Trust has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Northern Trust's last earnings report, the payout ratio is at a decent 31%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, earnings per share is forecast to fall by 2.1% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 35% over the same time period, which is in a pretty comfortable range.

Northern Trust Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $1.32 in 2015 to the most recent total annual payment of $3.00. This implies that the company grew its distributions at a yearly rate of about 8.6% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

We Could See Northern Trust's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Northern Trust has grown earnings per share at 8.6% per year over the past five years. Northern Trust definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Northern Trust 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. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Northern Trust that investors should know about before committing capital to this stock. 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.