In This Article:
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Citizens Financial Services in Focus
Headquartered in Mansfield, Citizens Financial Services (CZFS) is a Finance stock that has seen a price change of -8.92% so far this year. The bank is currently shelling out a dividend of $0.5 per share, with a dividend yield of 3.43%. This compares to the Banks - Northeast industry's yield of 2.74% and the S&P 500's yield of 1.59%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.98 is up 1% from last year. Citizens Financial Services has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 1.50%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Citizens Financial Services's current payout ratio is 32%. This means it paid out 32% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for CZFS for this fiscal year. The Zacks Consensus Estimate for 2025 is $6.40 per share, which represents a year-over-year growth rate of 6.49%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CZFS presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).