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High-Yield, Huge Dividend Increase, Still Cheap!

August 30, 2025

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At Butterfield banco

Every time I think about today’s stock, I end up humming along to The Beach Boys “Kokomo.” And that’s because the company in question is a Caribbean banking firm that dates all the way back to 1784. In fact, it’s actually Bermuda's first bank.

The Bank of N.T. Butterfield & Son Limited ($NTB) is a Bermuda based bank that offers private banking services to high-net-worth individuals.

The company primarily operates in Bermuda, the Cayman Islands, Guernsey, Jersey, The Bahamas, Hong Kong, Switzerland, and Singapore.

In 2016, Butterfield & Son listed on the New York Stock Exchange. And for many years, this company paid a high starting dividend yield while trading at a cheap valuation. Year-to-date, Butterfield & Son is up +23.45%.

Yet, the company is still cheap and still high-yield.

This is due to the fact that Butterfield & Son has grown its earnings per share and raised its dividend by 14%.

In 2024, the bank’s stock had an earnings per share of $4.77.

In 2025, the bank’s earnings per share are estimated to be $5.21.

So while Butterfield & Son’s share price has jumped from $35 per share to $45, the company still trades at a single-digit valuation while also paying a 4.43% starting yield.

Here’s a more in-depth look at the firm’s underlying metrics…

The Bank of N.T. Butterfield & Son Limited ($NTB)

In 1784, Nathaniel Butterfield established a mercantile business in Bermuda. In 1858, Nathaniel T. Butterfield founded Bermuda’s first bank — what is now known as The Bank of N.T. Butterfield & Son Limited.

Butterfield & Son created its trust and wealth management divisions in 1936. During World War Two, the bank offered services to military personnel stationed in St. George's, Bermuda. And in the 1960’s, Butterfield & Son began expanding its operations internationally when it opened offices in both London and the Cayman Islands.

Today, The Bank of N.T. Butterfield & Son offers “bespoke financial solutions.”

The company specializes in offshore banking services, trust funds, and asset management.

And while Butterfield & Son does offer retail banking services, the company primarily focuses on serving high-net-worth individuals. For example, while researching this report I found an article about Butterfield’s mortgage operations which stated that borrowers “will typically need to earn over £300,000 or have at least £3 million of net assets.”

This is a well-established bank serving wealthy clientele. Yet, Butterfield & Son trades at a relatively cheap valuation while also paying a high starting yield.

At the time of writing, the company is valued at a price to earnings ratio of 8.65.

Additionally, thanks to Butterfield & Son raising its dividend by 14% earlier this year, the company is paying a 4.43% starting yield. In comparison, Citigroup Inc. is paying a 2.49% starting yield, and Wells Fargo is paying 2.19%.

And since listing on the New York Stock Exchange in 2016, Butterfield & Son has delivered a 9-year average annual total return of 12.16%.

The bank has underperformed the S&P 500, but outperformed more recognizable banking names like Citigroup, which delivered a 10-year average annual total return of 9.72%, and Wells Fargo, which delivered a 10-year average annual total return of 7.91%.

  • Forward PE ratio of 8.65

  • 4.43% starting dividend yield

  • 5-year dividend CAGR of 0.67%

  • Payout ratio of 34.78%

  • 9-year average annual total return of 12.16%

In terms of dividend growth, Butterfield & Son paid a $0.44/share quarterly dividend from 2019 to 2025.

This is not a company that raises its dividend every year.

However, the high starting yield somewhat mitigates the slow dividend growth.

Plus, the dividend is well-covered and has increased over time. In 2017, Butterfield & Son was paying a $0.32/share quarterly dividend. Today, investors are collecting $0.50/share in quarterly dividends.

The Bank of N.T. Butterfield & Son is an interesting, niche business that trades at a low valuation while paying a 4.43% starting dividend yield.

I like this company and would be interested in acquiring shares, even though Butterfield & Son is up significantly year-to-date. The earnings growth and dividend raise offset the increased share price, maintaining this company’s status as a cheap high-yielder.

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Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.