Citizens & Northern (NASDAQ:CZNC) Has Affirmed Its Dividend Of $0.28

Citizens & Northern Corporation (NASDAQ:CZNC) has announced that it will pay a dividend of $0.28 per share on the 9th of August. Based on this payment, the dividend yield on the company's stock will be 5.6%, which is an attractive boost to shareholder returns.

View our latest analysis for Citizens & Northern

Citizens & Northern's Earnings Will Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Having distributed dividends for at least 10 years, Citizens & Northern has a long history of paying out a part of its earnings to shareholders. Based on Citizens & Northern's last earnings report, the payout ratio is at a decent 74%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, earnings per share is forecast to rise by 11.6% over the next year. If the dividend continues on this path, the future payout ratio could be 67% by next year, which we think can be pretty sustainable going forward.

Citizens & Northern Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the dividend has gone from $1.00 total annually to $1.12. This implies that the company grew its distributions at a yearly rate of about 1.1% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Citizens & Northern May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Unfortunately, Citizens & Northern's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

In Summary

Overall, a consistent dividend is a good thing, and we think that Citizens & Northern has the ability to continue this into the future. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. See if management have their own wealth at stake, by checking insider shareholdings in Citizens & Northern stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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