Northern Technologies International: A Steady Dividend in an Unsteady Market

Northern Technologies International (NASDAQ:NTIC) has announced a quarterly cash dividend of $0.07 per common share, payable on February 12, 2025. This dividend marks the company's 38th consecutive payment, a testament to its commitment to returning value to shareholders. Let's dive into the reasons behind this consistent dividend policy and what it means for investors.



A History of Dividend Growth
Northern Technologies International has a history of growing its dividend payments. The company's annualized dividend per share has increased from $0.26 in 2021 to $0.28 in 2022, representing a 5.66% increase. This growth is higher than the industry average dividend growth rate of 1.9% over the past 5 years. NTIC's dividend growth rate indicates a more stable and growing dividend policy compared to its peers.



Factors Contributing to Dividend Growth
Several factors contribute to Northern Technologies International's dividend growth and stability:

1. Strong Financial Performance: NTIC has demonstrated consistent revenue growth and profitability over the years. In the fiscal year 2024, NTIC reported a 6.5% increase in net sales and a significant profit increase compared to the previous year. This financial strength enables the company to maintain and grow its dividend payments.
2. Dividend Payout Ratio: NTIC's dividend payout ratio has been relatively stable and within a reasonable range. As of 2024, the payout ratio was 52.8%, which is lower than the Basic Materials sector average of 40.8%. A lower payout ratio indicates that the company is retaining a significant portion of its earnings, which can be reinvested to support future growth and dividend increases.
3. Cash Flow Generation: NTIC generates positive operating cash flow, which is crucial for sustaining and growing dividends. In the last 12 months, NTIC generated $5.20 million in operating cash flow, which helped support its dividend payments.
4. Consistent Dividend History: NTIC has a history of paying dividends consistently, with 38 dividend payments since 1995. This consistency builds investor confidence and contributes to the stability of the company's dividend.
5. Growth in Key Markets: NTIC's expansion into new markets, such as India and China, has contributed to its revenue growth and dividend stability. For example, NTIC China's sales increased by 8.6% in the first quarter of 2025, indicating a positive trend in this key market.
6. Innovation and Product Development: NTIC's focus on research and development has led to the creation of new products and solutions, which drive revenue growth and support dividend stability. The company's Natur-Tec and Zerust product lines have contributed significantly to its revenue growth and dividend payments.



A Steady Dividend in an Unsteady Market
Northern Technologies International's consistent dividend policy provides investors with a reliable source of income, even in an uncertain market environment. While the company's stock price may fluctuate, its dividend payments remain steady and predictable. This makes NTIC an attractive investment option for income-oriented investors, retirees, and those seeking a stable return on their investment.

Conclusion
Northern Technologies International's announcement of a $0.07 quarterly cash dividend underscores the company's commitment to returning value to shareholders. The company's history of dividend growth, strong financial performance, and expansion into new markets make it an attractive investment option for income-oriented investors. As the market continues to fluctuate, NTIC's steady dividend policy provides investors with a reliable source of income and a solid foundation for their portfolios.