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Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, Citizens Community Bancorp, Inc. (NASDAQ:CZWI) has paid dividends to shareholders, and these days it yields 1.6%. Should it have a place in your portfolio? Let's take a look at Citizens Community Bancorp in more detail.
5 questions to ask before buying a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is their annual yield among the top 25% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has it increased its dividend per share amount over the past?
Is its earnings sufficient to payout dividend at the current rate?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Citizens Community Bancorp pass our checks?
The current trailing twelve-month payout ratio for the stock is 34%, which means that the dividend is covered by earnings. However, going forward, analysts expect CZWI's payout to fall to 16% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 1.7%. However, EPS should increase to $1.19, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. CZWI investors will be well aware the dividend payments are lower today than they were 10 years ago, although the payments have at least been steady. However, income investors that value stability over growth may still find CZWI appealing.
Relative to peers, Citizens Community Bancorp produces a yield of 1.6%, which is on the low-side for Mortgage stocks.
With this in mind, I definitely rank Citizens Community Bancorp as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I've put together three relevant aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for CZWI’s future growth? Take a look at our free research report of analyst consensus for CZWI’s outlook.
Valuation: What is CZWI worth today? Even if the stock is a cash cow, it's not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CZWI is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.