Citizens & Northern Corporation (NASDAQ:CZNC) has pleased shareholders over the past 10 years, by paying out dividends. The company is currently worth US$322m, and now yields roughly 4.2%. Does Citizens & Northern tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has dividend per share amount increased over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
Does Citizens & Northern pass our checks?
Citizens & Northern has a trailing twelve-month payout ratio of 60%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect CZNC’s payout to remain around the same level at 57% of its earnings. Assuming a constant share price, this equates to a dividend yield of 4.4%. Furthermore, EPS is forecasted to fall to $1.73 in the upcoming year.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. 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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
In terms of its peers, Citizens & Northern produces a yield of 4.2%, which is high for Banks stocks.
Considering the dividend attributes we analyzed above, Citizens & Northern is definitely worth keeping an eye on for someone looking to build a dedicated income 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 pertinent factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for CZNC’s future growth? Take a look at our free research report of analyst consensus for CZNC’s outlook.
- Valuation: What is CZNC 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 CZNC 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 firstname.lastname@example.org. 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.