Northern Trust's (NASDAQ:NTRS) Upcoming Dividend Will Be Larger Than Last Year's

Northern Trust Corporation (NASDAQ:NTRS) has announced that it will be increasing its periodic dividend on the 1st of October to $0.75, which will be 7.1% higher than last year's comparable payment amount of $0.70. This makes the dividend yield about the same as the industry average at 2.9%.

Check out our latest analysis for Northern Trust

Northern Trust's Payment Expected To Have Solid Earnings Coverage

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

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 39% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 30.4%. 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.

Northern Trust Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the dividend has gone from $1.12 total annually to $2.80. This works out to be a compound annual growth rate (CAGR) of approximately 9.6% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend Looks Likely To Grow

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 10% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Northern Trust's prospects of growing its dividend payments in the future.

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. 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 in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 15 Northern Trust analysts we track are forecasting continued growth with our free report on analyst estimates for the company. 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.