Yahoo Finance Is Citizens Financial Group Inc (NYSE:CFG) An Attractive Dividend Stock?
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Citizens Financial Group Inc (NYSE:CFG) has paid a dividend to shareholders in the last few years. It currently yields 3.0%. Should it have a place in your portfolio? Let’s take a look at Citizens Financial Group in more detail.
Check out our latest analysis for Citizens Financial Group
Here’s how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
Is it the top 25% annual dividend yield payer?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share amount increased over the past?
Is is able to pay the current rate of dividends from its earnings?
Will it have the ability to keep paying its dividends going forward?
Does Citizens Financial Group pass our checks?
The company currently pays out 23% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 36%, leading to a dividend yield of 3.5%. However, EPS is forecasted to fall to $3.78 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view Citizens Financial Group as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, Citizens Financial Group generates a yield of 3.0%, which is high for Banks stocks but still below the market’s top dividend payers.
Next Steps:
If you are building an income portfolio, then Citizens Financial Group is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three key factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for CFG’s future growth? Take a look at our free research report of analyst consensus for CFG’s outlook.
Valuation: What is CFG worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CFG is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
