Triple Insider Buy With A 4.72% Dividend Yield

In the past 20 years, insiders at Northern Trust Corporation (NTRS) sold more than $708 million in stock while buying a touch more than $11.6 million. The timeline is a sea of red sells with occasional blue buys sprinkled in. (1)

Northern Trust is a financial holding company that provides wealth management, asset servicing, asset management, and banking solutions for corporations, institutions, families, and individuals worldwide. It operates in two segments, Asset Servicing and Wealth Management.

A trio of NTRS insiders appear to be managing their wealth buying Northern Trust stock last week.

  • Chairman and Chief Executive Officer (CEO) Michael O’Grady purchased 20,000 shares at $65.10, investing more than $1.3 million. (2)
  • Executive Vice President (EVP) and General Counsel Susan Levy Cohen acquired 5,000 shares at $64.41 for a total of $322,050. (3)
  • EVP and Chief Financial Officer (CFO) Jason Tyler bought 1,750 shares at $64.12, spending $112,219. (4)

We call it cluster buying when multiple insiders at the same company buy simultaneously; three in this case, including the top two C-Suite executives with the CEO and CFO. And, we call it a change of heart when insiders go from seller to buyers for the first time.

That’s the case for CEO O’Grady and CFO Tyler.

Grady sold twice previously in 2021, at $117.74 and $119.03, collecting more than $17 million. Meanwhile, CFO Tyler sold once in 2021, 2022, and earlier this year at $120.03, $115.60, and $96.98, respectively. All in, he banked $756,645.

All three insiders headed to the market at the financial services company set its 52-week low of $62.44. Perhaps they see value in a company that trades for a few dollars more than its book value of $52.95 per share. As we type, NTRS trades at $63.54 per share or 1.22 times book value (P/B). One year ago, Northern Trust was valued at 1.75 times book value and at 1.432 times book value just in June. (5)

Or maybe the trio was interested in Northern Trust’s current dividend yield of 4.72 percent ($3 per share.) The dividend payout has risen from $1.20 to $3.00 in the last 10 years. With a payout ratio of 57 percent and earnings per share expected to remain stable through next year, the dividend should remain safe.

Or maybe the insiders see Wall Street’s one-year price target of $74.85 (17.8 percent upside potential for its current price). Add in the dividend, and the total growth and income potential tops 22.5 percent.

Overall: Northern Trust Corporation (NTRS) appears to offer investors value with the potential for handsome growth and a strong income stream at current levels. With a five-year beta of 1.1, shares are slightly more volatile than the S&P 500 (beta of 1).

NTRS could be appropriate for growth and income investors with a slightly above-average risk tolerance and a time horizon of at least 12-18 months.

Rich Meyers


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