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Citizens Financial Services, Inc. (NASDAQ:CZFS) has announced that it will be increasing its periodic dividend on the 28th of March to $0.495, which will be 1.0% higher than last year's comparable payment amount of $0.49. Based on this payment, the dividend yield for the company will be 3.3%, which is fairly typical for the industry.
View our latest analysis for Citizens Financial Services
Citizens Financial Services' Earnings Will Easily Cover The Distributions
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.
Citizens Financial Services has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 33%, which means that Citizens Financial Services would be able to pay its last dividend without pressure on the balance sheet.
Over the next 3 years, EPS is forecast to expand by 22.7%. The future payout ratio could be 30% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
Citizens Financial Services Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the annual payment back then was $1.38, compared to the most recent full-year payment of $1.96. This works out to be a compound annual growth rate (CAGR) of approximately 3.6% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
The Dividend's Growth Prospects Are Limited
The company's investors will be pleased to have been receiving dividend income for some time. Earnings have grown at around 2.1% a year for the past five years, which isn't massive but still better than seeing them shrink. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.
Citizens Financial Services Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Citizens Financial Services is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.