Northern Trust's (NASDAQ:NTRS) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Northern Trust Corporation (NASDAQ:NTRS) has announced that it will be paying its dividend of $0.80 on the 1st of October, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 2.5%.

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Northern Trust's Dividend Forecasted To Be Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time.

Northern Trust has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Northern Trust's payout ratio of 35% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 18.0%. The future payout ratio could be 35% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

View our latest analysis for Northern Trust

Northern Trust Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from $1.32 total annually to $3.20. This implies that the company grew its distributions at a yearly rate of about 9.3% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Northern Trust Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Northern Trust has impressed us by growing EPS at 6.4% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like Northern Trust's Dividend

Overall, a dividend increase is always good, and we think that Northern Trust is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Northern Trust that investors need to be conscious of moving forward. 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.