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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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
Citizens Financial Services (CZFS) is headquartered in Mansfield, and is in the Finance sector. The stock has seen a price change of -11.69% since the start of the year. The bank is paying out a dividend of $0.5 per share at the moment, with a dividend yield of 3.54% compared to the Banks - Northeast industry's yield of 3.2% and the S&P 500's yield of 1.69%.
Looking at dividend growth, the company's current annualized dividend of $1.98 is up 1% from last year. Over the last 5 years, Citizens Financial Services has increased its dividend 4 times on a year-over-year basis for an average annual increase of 2.52%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Citizens Financial Services's payout ratio is 32%, which 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, representing a year-over-year earnings growth rate of 6.49%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CZFS is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).