It looks like Citizens Community Bancorp, Inc. (NASDAQ:CZWI) is about to go ex-dividend in the next 4 days. Ex-dividend means that investors that purchase the stock on or after the 10th of February will not receive this dividend, which will be paid on the 25th of February.
Citizens Community Bancorp's next dividend payment will be US$0.23 per share. Last year, in total, the company distributed US$0.23 to shareholders. Based on the last year's worth of payments, Citizens Community Bancorp stock has a trailing yield of around 2.1% on the current share price of $11.2. If you buy this business for its dividend, you should have an idea of whether Citizens Community Bancorp's dividend is reliable and sustainable. So we need to investigate whether Citizens Community Bancorp can afford its dividend, and if the dividend could grow.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Citizens Community Bancorp paid out just 18% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Citizens Community Bancorp's earnings per share have been growing at 15% a year for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last eight years, Citizens Community Bancorp has lifted its dividend by approximately 36% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
To Sum It Up
Is Citizens Community Bancorp worth buying for its dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating Citizens Community Bancorp more closely.
On that note, you'll want to research what risks Citizens Community Bancorp is facing. Be aware that Citizens Community Bancorp is showing 3 warning signs in our investment analysis, and 1 of those is potentially serious...
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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What are the risks and opportunities for Citizens Community Bancorp?
Trading at 42.2% below our estimate of its fair value
Earnings are forecast to decline by an average of 8% per year for the next 3 years
This article by Simply Wall St is general in nature. 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.
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