The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) Passed Our Checks, And It’s About To Pay A US$0.44 Dividend
Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) is about to go ex-dividend in just 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn’t show on the record date. In other words, investors can purchase Bank of N.T. Butterfield & Son’s shares before the 7th of November in order to be eligible for the dividend, which will be paid on the 22nd of November.
The company’s next dividend payment will be US$0.44 per share, on the back of last year when the company paid a total of US$1.76 to shareholders. Based on the last year’s worth of payments, Bank of N.T. Butterfield & Son has a trailing yield of 7.0% on the current stock price of $25.3. If you buy this business for its dividend, you should have an idea of whether Bank of N.T. Butterfield & Son’s dividend is reliable and sustainable. So we need to investigate whether Bank of N.T. Butterfield & Son can afford its dividend, and if the dividend could grow.
View our latest analysis for Bank of N.T. Butterfield & Son
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That’s why it’s good to see Bank of N.T. Butterfield & Son paying out a modest 37% of its earnings.
Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we’re glad to see Bank of N.T. Butterfield & Son’s earnings per share have risen 12% per annum over the last five years.
The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. In the past seven years, Bank of N.T. Butterfield & Son has increased its dividend at approximately 24% a year on average. It’s exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
Final Takeaway
Should investors buy Bank of N.T. Butterfield & Son for the upcoming dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it’s usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly – this can sometimes signal management is focused on the long term future of the business. Overall, Bank of N.T. Butterfield & Son looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
On that note, you’ll want to research what risks Bank of N.T. Butterfield & Son is facing. To help with this, we’ve discovered 2 warning signs for Bank of N.T. Butterfield & Son (1 is concerning!) that you ought to be aware of before buying the shares.
If you’re in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
Valuation is complex, but we’re helping make it simple.
Find out whether Bank of N.T. Butterfield & Son is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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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.
