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Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Citizens Community Bancorp, Inc. (NASDAQ:CZWI) is about to trade ex-dividend in the next four days. You will need to purchase shares before the 10th of February to receive the dividend, which will be paid on the 25th of February.
Citizens Community Bancorp's upcoming dividend is US$0.23 a share, following on from the last 12 months, when the company distributed a total of US$0.23 per share to shareholders. Based on the last year's worth of payments, Citizens Community Bancorp has a trailing yield of 2.1% on the current stock price of $11.2. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Citizens Community Bancorp can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Citizens Community Bancorp
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Citizens Community Bancorp is paying out just 18% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Citizens Community Bancorp's earnings per share have been growing at 15% a year for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past eight years, Citizens Community Bancorp has increased its dividend at approximately 36% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
To Sum It Up
From a dividend perspective, should investors buy or avoid Citizens Community Bancorp? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Citizens Community Bancorp ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.