Citizens Financial Group (NYSE:CFG) Will Pay A Larger Dividend Than Last Year At $0.46

Citizens Financial Group, Inc. (NYSE:CFG) has announced that it will be increasing its periodic dividend on the 12th of November to $0.46, which will be 9.5% higher than last year's comparable payment amount of $0.42. This makes the dividend yield about the same as the industry average at 3.4%.

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Citizens Financial Group's Payment Expected To Have Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time.

Citizens Financial Group 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 47%, which means that Citizens Financial Group would be able to pay its last dividend without pressure on the balance sheet.

The next 3 years are set to see EPS grow by 91.9%. The future payout ratio could be 33% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Check out our latest analysis for Citizens Financial Group

Citizens Financial Group Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was $0.40, compared to the most recent full-year payment of $1.68. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Citizens Financial Group has been growing its earnings per share at 10% a year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

We Really Like Citizens Financial Group's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 18 Citizens Financial Group analysts we track are forecasting continued growth with our free report on analyst estimates for the company. 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.