Jhe Dividend Channel’s DividendRank formula ranks a coverage universe of thousands of dividend-paying stocks, using a proprietary formula designed to identify stocks that combine two important characteristics: strong fundamentals and a valuation that appears inexpensive. Northern Trust Corp (Symbol: NTRS) currently has an above-average ranking in the top 50% of the coverage universe, suggesting it is among the more “interesting” ideas that merit further research from investors.
But making Northern Trust Corp an even more interesting and timely stock to watch is the fact that during Thursday’s trading, shares of NTRS entered oversold territory, changing hands as low as $108.14. per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered oversold if the RSI reading falls below 30. In the case of Northern Trust Corp, the RSI reading reached 29.3 – in comparison, the universe of dividend stocks covered by Dividend Channel currently has an average RSI of 37.3 . A decline in stock prices – all things being equal – creates a better opportunity for dividend investors to capture a higher yield. Indeed, NTRS’ recent annualized dividend of 2.8/share (currently paid in quarterly installments) corresponds to an annual return of 2.46% based on the recent share price of $113.64.
A bullish investor might take today’s RSI reading of 29.3 from NTRS as a sign that the recent selloff is running out of steam and starting to look for entry point opportunities on the buy side. Among the fundamental data points dividend investors should investigate to decide if they are bullish on NTRS is its dividend history. In general, dividends are not always predictable; However, examining the chart below can help determine if the most recent dividend is likely to continue.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.