Why Citizens Financial Services (CZFS) is a Great Dividend Stock Right Now

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Citizens Financial Services (CZFS) is headquartered in Mansfield, and is in the Finance sector. The stock has seen a price change of -15.57% since the start of the year. The bank is paying out a dividend of $0.50 per share at the moment, with a dividend yield of 3.7% compared to the Banks - Northeast industry's yield of 2.73% and the S&P 500's yield of 1.53%.

Looking at dividend growth, the company's current annualized dividend of $1.98 is up 1% from last year. Over the last 5 years, Citizens Financial Services has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.36%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Citizens Financial Services's current payout ratio is 30%, meaning it paid out 30% of its trailing 12-month EPS as dividend.

CZFS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $6.90 per share, representing a year-over-year earnings growth rate of 14.81%.

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.

Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that CZFS is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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