Citizens Community Bancorp (NASDAQ:CZWI) Is Increasing Its Dividend To $0.29

Citizens Community Bancorp, Inc. (NASDAQ:CZWI) will increase its dividend from last year's comparable payment on the 17th of February to $0.29. Despite this raise, the dividend yield of 2.3% is only a modest boost to shareholder returns.

See our latest analysis for Citizens Community Bancorp

Citizens Community Bancorp's Payment Expected To Have Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Having distributed dividends for at least 10 years, Citizens Community Bancorp has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, Citizens Community Bancorp's latest earnings report puts its payout ratio at 15%, showing that the company can pay out its dividends comfortably.

Over the next 3 years, EPS is forecast to fall by 21.4%. Fortunately, analysts forecast the future payout ratio to be 20% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

Citizens Community Bancorp Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.02 in 2013, and the most recent fiscal year payment was $0.29. This implies that the company grew its distributions at a yearly rate of about 31% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Citizens Community Bancorp has grown earnings per share at 27% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

We Really Like Citizens Community Bancorp's Dividend

Overall, a dividend increase is always good, and we think that Citizens Community Bancorp is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Citizens Community Bancorp that investors should know about before committing capital to this 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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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.