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Citizens Financial (CFG) Under Spotlight for Its Dividend Yield
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Solid dividend-yielding stocks are highly desirable in an uncertain macroeconomic environment. One such stock from the banking industry is Citizens Financial Group, Inc. (CFG - Free Report) .
This Providence, RI-based company offers retail and commercial banking products and services to individuals, institutions and companies.
CFG has been paying quarterly dividends on a regular basis and raising the same. In July 2022, the company increased its common stock dividend by 8% to 42 cents per share. Over the past five years, it increased dividends four times, with an annualized dividend growth rate of 6.5%.
Considering the Dec 18 closing price of $32.96 per share, CFG’s current dividend yield is pegged at 5%. This is impressive compared with the industry’s average of 2.9% and attracts investors as it represents a steady income stream.
Is CFG stock worth a look to earn a high dividend yield? Let us check the company’s fundamentals to understand its risks and rewards for making a proper investment decision.
Apart from regular quarterly dividend payouts, CFG has a share repurchase program in place. In February 2023, it increased the capacity of the common share repurchase program by an additional $1.15 billion, bringing the total authorizing capacity to $2 million. During the nine months ended Sep 30, 2023, it repurchased $906 million of its common stock, with $1.1 billion remaining under the current authorization.
As of Sep 30, 2023, the company’s capital ratios exceeded regulatory requirements, with a Common Equity Tier 1 (CET1) ratio and a total capital ratio of 10.4% and 13.4%, respectively. Citizens Financials’ focus on maintaining a strong capital position will support capital distribution activities.
As of Sep 30, 2023, the company had total borrowed funds of $17.6 billion, while total available liquidity was $75.2 billion, indicating debt levels will be manageable. Though its times interest earned ratio declined sequentially in third-quarter 2023 to 4.5, it remains at a decent level. The company’s senior long-term debt enjoyed investment-grade credit ratings of BBB+, BBB+ and Baa1 from Standard & Poor’s, Fitch, and Moody’s, respectively. Given its decent liquidity, dividend payments seem sustainable.
Citizens Financial’s long-term strategy involved growth in wealth management offerings, improvement of capabilities in the high-net-worth segment and expansion into the key markets. In October 2023, it launched Citizens Private Bank, enhancing its operations in the wealth management space. The company plans to open six private banking offices in 2023 and throughout 2024.
However, rising costs on expansion moves will likely limit Citizens Financial's bottom-line growth. High mortgage rates will affect mortgage banking fees, while commercial loan concentration remains worrisome.
Over the past six months, shares of CFG have gained 20.9% compared with the industry’s rise of 15.8%.
Image: Shutterstock
Citizens Financial (CFG) Under Spotlight for Its Dividend Yield
Solid dividend-yielding stocks are highly desirable in an uncertain macroeconomic environment. One such stock from the banking industry is Citizens Financial Group, Inc. (CFG - Free Report) .
This Providence, RI-based company offers retail and commercial banking products and services to individuals, institutions and companies.
CFG has been paying quarterly dividends on a regular basis and raising the same. In July 2022, the company increased its common stock dividend by 8% to 42 cents per share. Over the past five years, it increased dividends four times, with an annualized dividend growth rate of 6.5%.
Considering the Dec 18 closing price of $32.96 per share, CFG’s current dividend yield is pegged at 5%. This is impressive compared with the industry’s average of 2.9% and attracts investors as it represents a steady income stream.
Is CFG stock worth a look to earn a high dividend yield? Let us check the company’s fundamentals to understand its risks and rewards for making a proper investment decision.
Apart from regular quarterly dividend payouts, CFG has a share repurchase program in place. In February 2023, it increased the capacity of the common share repurchase program by an additional $1.15 billion, bringing the total authorizing capacity to $2 million. During the nine months ended Sep 30, 2023, it repurchased $906 million of its common stock, with $1.1 billion remaining under the current authorization.
As of Sep 30, 2023, the company’s capital ratios exceeded regulatory requirements, with a Common Equity Tier 1 (CET1) ratio and a total capital ratio of 10.4% and 13.4%, respectively. Citizens Financials’ focus on maintaining a strong capital position will support capital distribution activities.
As of Sep 30, 2023, the company had total borrowed funds of $17.6 billion, while total available liquidity was $75.2 billion, indicating debt levels will be manageable. Though its times interest earned ratio declined sequentially in third-quarter 2023 to 4.5, it remains at a decent level. The company’s senior long-term debt enjoyed investment-grade credit ratings of BBB+, BBB+ and Baa1 from Standard & Poor’s, Fitch, and Moody’s, respectively. Given its decent liquidity, dividend payments seem sustainable.
Citizens Financial’s long-term strategy involved growth in wealth management offerings, improvement of capabilities in the high-net-worth segment and expansion into the key markets. In October 2023, it launched Citizens Private Bank, enhancing its operations in the wealth management space. The company plans to open six private banking offices in 2023 and throughout 2024.
However, rising costs on expansion moves will likely limit Citizens Financial's bottom-line growth. High mortgage rates will affect mortgage banking fees, while commercial loan concentration remains worrisome.
Over the past six months, shares of CFG have gained 20.9% compared with the industry’s rise of 15.8%.
Image Source: Zacks Investment Research
CFG currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Bank Stocks With Attractive Dividend Yields
Banking stocks like Premier Financial (PFC - Free Report) and KeyCorp (KEY - Free Report) are worth a look as these, too, have robust dividend yields.
Considering the Dec 18 closing price, PFC’s dividend yield is pegged at 5.3%. In the past six months, PFC shares have gained 40.3%.
Based on the last day’s closing price, KeyCorp’s dividend yield is pinned at 5.7%. In the past six months, KEY shares have gained 42.1%.