The board of Citizens & Northern Corporation (NASDAQ:CZNC) has announced that it will pay a dividend on the 15th of August, with investors receiving $0.28 per share. This makes the dividend yield 5.8%, which will augment investor returns quite nicely.

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Citizens & Northern's Payment Expected To Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Having distributed dividends for at least 10 years, Citizens & Northern has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Citizens & Northern's payout ratio of 64% is a good sign as this means that earnings decently cover dividends.

The next year is set to see EPS grow by 10.7%. If the dividend continues on this path, the future payout ratio could be 59% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Citizens & Northern

Citizens & Northern Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $1.04 in 2015, and the most recent fiscal year payment was $1.12. Dividend payments have been growing, but very slowly over the period. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. Earnings per share has been crawling upwards at 3.0% per year. The company has been growing at a pretty soft 3.0% per annum, and is paying out quite a lot of its earnings to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.

Citizens & Northern Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Are management backing themselves to deliver performance? Check their shareholdings in Citizens & Northern in our latest insider ownership analysis. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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