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Citizens Financial Group (CFG) Could Be a Great Choice

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.

Cash flow can come from bond interest, interest from other types of investments, and of course, 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 Group in Focus

Based in Providence, Citizens Financial Group (CFG) is in the Finance sector, and so far this year, shares have seen a price change of -1.73%. The bank is paying out a dividend of $0.42 per share at the moment, with a dividend yield of 4.34% compared to the Financial - Savings and Loan industry's yield of 2.89% and the S&P 500's yield of 1.69%.

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In terms of dividend growth, the company's current annualized dividend of $1.68 is up 3.7% from last year. In the past five-year period, Citizens Financial Group has increased its dividend 4 times on a year-over-year basis for an average annual increase of 12.27%. 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 Group's current payout ratio is 35%, meaning it paid out 35% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for CFG for this fiscal year. The Zacks Consensus Estimate for 2023 is $5.03 per share, with earnings expected to increase 22.68% from the year ago period.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CFG is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).

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Citizens Financial Group, Inc. (CFG) : Free Stock Analysis Report

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