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

The board of Citizens & Northern Corporation (NASDAQ:CZNC) has announced that it will pay a dividend on the 8th of November, with investors receiving $0.28 per share. Based on this payment, the dividend yield on the company's stock will be 5.8%, which is an attractive boost to shareholder returns.

See our latest analysis for Citizens & Northern

Citizens & Northern's Dividend Forecasted To Be Well Covered By Earnings

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. Past distributions do not necessarily guarantee future ones, but Citizens & Northern's payout ratio of 78% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 37.9%. Despite the current payout ratio being slightly elevated, analysts estimate the future payout ratio will be 60% over the same time period, which would make us comfortable with the sustainability of the dividend.

Citizens & Northern Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. 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. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Citizens & Northern hasn't seen much change in its earnings per share over the last five years.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. Although they have been consistent in the past, we think the payments are a little high to be sustained. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Now, if you want to look closer, it would be worth checking out our free research on Citizens & Northern management tenure, salary, and performance. 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.