All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and, of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Northern Trust Corporation (NTRS) is headquartered in Chicago, and is in the Finance sector. The stock has seen a price change of 11.39% since the start of the year. The company is paying out a dividend of $0.80 per share at the moment, with a dividend yield of 2.1% compared to the Banks - Major Regional industry's yield of 2.95% and the S&P 500's yield of 1.34%.
Looking at dividend growth, the company's current annualized dividend of $3.20 is up 3.2% from last year. Over the last 5 years, Northern Trust Corporation has increased its dividend 1 times on a year-over-year basis for an average annual increase of 2.01%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Northern Trust's current payout ratio is 36%, meaning it paid out 36% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for NTRS for this fiscal year. The Zacks Consensus Estimate for 2026 is $9.83 per share, with earnings expected to increase 9.10% from the year ago period.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that NTRS is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Northern Trust Corporation (NTRS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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