Citizens & Northern (NASDAQ:CZNC) Will Pay A Dividend Of $0.28

Citizens & Northern Corporation (NASDAQ:CZNC) has announced that it will pay a dividend of $0.28 per share on the 17th of May. The dividend yield will be 6.6% based on this payment which is still above the industry average.

See our latest analysis for Citizens & Northern

Citizens & Northern's Earnings Will Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Citizens & Northern 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 74%, which means that Citizens & Northern would be able to pay its last dividend without pressure on the balance sheet.

The next year is set to see EPS grow by 9.0%. If the dividend continues along recent trends, we estimate the future payout ratio will be 69%, which is in the range that makes us comfortable with the sustainability of the dividend.

Citizens & Northern Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $1.00, compared to the most recent full-year payment of $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.

The Dividend's Growth Prospects Are Limited

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Citizens & Northern has seen earnings per share falling at 4.1% per year over the last five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

Our Thoughts On Citizens & Northern's Dividend

Overall, we think Citizens & Northern is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Are management backing themselves to deliver performance? Check their shareholdings in Citizens & Northern in our latest insider ownership analysis. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.