Citizens Financial Group (NYSE:CFG) Has Affirmed Its Dividend Of $0.42

The board of Citizens Financial Group, Inc. (NYSE:CFG) has announced that it will pay a dividend of $0.42 per share on the 16th of August. This means the annual payment is 5.4% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Citizens Financial Group

Citizens Financial Group's Dividend Forecasted To Be Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

Citizens Financial Group has a good history of paying out dividends, with its current track record at 9 years. While past data isn't a guarantee for the future, Citizens Financial Group's latest earnings report puts its payout ratio at 19%, showing that the company can pay out its dividends comfortably.

Over the next 3 years, EPS is forecast to fall by 9.7%. Despite that, analysts estimate the future payout ratio could be 43% over the same time period, which is in a pretty comfortable range.

Citizens Financial Group Doesn't Have A Long Payment History

It is great to see that Citizens Financial Group has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from an annual total of $0.40 in 2014 to the most recent total annual payment of $1.68. This works out to be a compound annual growth rate (CAGR) of approximately 17% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

Citizens Financial Group May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings has been rising at 3.9% per annum over the last five years, which admittedly is a bit slow. While growth may be thin on the ground, Citizens Financial Group could always pay out a higher proportion of earnings to increase shareholder returns.

In Summary

Overall, a consistent dividend is a good thing, and we think that Citizens Financial Group has the ability to continue this into the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. 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.

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. To that end, Citizens Financial Group has 2 warning signs (and 1 which is a bit concerning) we think you should know about. 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.