The Dividend Diplomats were back at it again! Yes, both of us purchased the same company approximately two weeks ago and we wanted to share the purchase article with you. And yes, this is the second time we have both purchased a stock at the same time in 2016. Due to both of being busy with work, traveling, vacations, festivity planning, etc.. we were taken away from writing this article closer to the date of the stock purchases we made. Given that we are both Financial Institution auditors, we purchased a bank that is already friendly in our portfolio – Citizens & Northern (CZNC). Time to cash in those checks for stock!
Citizens & Northern (CZNC) Stock Purchase
Well, it wasn’t the first time we bought this stock, with Bert making a purchase back in January of this year, and me making an investment last year wayyy back in January of 2015. Even though it wasn’t on Bert’s recent low yield stock watch list, it was definitely on both of our radars as we went through the month of April. One Sunday, especially, Bert came over and we just talked for a while. I sat there and just stated, on my seasonal patio area, that the banking environment is making it more difficult by the quarter to stay in business if you don’t have size, capital and efficiencies – especially for the smaller community banks given the extreme regulation that is on the industry.
With that information and us both making purchases into Norwood Financial (NWFL) recently this year, it made sense for us to continue to add to the other community bank in our Roth IRA accounts in order to fulfill portions of our contributions for the year, as well as tax protect our cash in case any acquisition of these entities occur in the future (i.e. avoiding capital gains tax). It was time to add to our positions in Citizens and Northern (CZNC). I purchased them in 2015 at $19.96 and Bert purchased them in the $19-20 range as well. We both made the investments on April 26th using a FREE investment sharebuilder plan credit, on that Tuesday, with a price of $20.38 (rounded). The big question is – how much capital outlay were we both able to use and how much forward dividend income were we able to add? Details below!
Lanny’s CZNC Stock Purchase Summary
I deployed a total capital amount of $2,184.00 to purchase 107.1676 shares of CZNC at a market price of $20.38 plus a $0.00 transaction fee, therefore, coinciding with my 2016 goal of keeping trading costs to a minimum this year. This wasn’t quite the big gun that I’m trying to use this year when making purchases over $3,000, but given that I had a free credit – there’s no sweat. The yield was at 5.10% at the time of purchased, they announced another buy back (as we know I love the share buyback and what it means for dividend investors) and with the purchase added $111.45 to my forward dividend income based on my portfolio. Bert – how did you do with your purchase?
Bert’s CZNC Stock Purchase Summary
Well Lanny, as they say, you save the best here for last. While you were able to buy triple digit shares, which is amazing, I was able to buy even more. Good thing the stock market forced my hand, kept climbing, and made it so I couldn’t purchase a stock for more than 30 days. It allowed me to save the capital needed for to maximize the amount of this purchase. In total, I used $2,515 of capital to purchase 123.4095 shares of CZNC at the same price. This purchase added $128 in forward dividend income to my portfolio and was made in my Roth IRA, which will allow me to maximize the benefit of receiving the dividends. What’s nuts here is that I already owned a decent amount of CZNC stock prior to this purchase and now, I own over 200 shares of the bank. I have never owned that much stock in one individual company before and it is a really cool feeling. CZNC is now my largest individual position in my portfolio and I am set to receive $209.11 in forward dividend income annually. At the current stock price, I would receive about 10.5 shares annually via DRIP. That’s how you get the dividend snowball rolling my friends and that’s the power of dividend re-investing at its finest! For everyone keeping track, this was the mystery purchase I mentioned during my April dividend income article.
Is this a large cap stock? No. Is this a Dividend Aristocrat? No. However, a few weeks ago, we were able to find the right stock, with the right yield, in the right industry, for the right price. The stock purchase slump on this website is officially over! We couldn’t be happier the addition to our portfolio based on all facts considered and hopefully there future opportunities to add to our positions.
What are your thoughts on our purchase? Have you purchased any banking stocks recently? If so, did you opt for a larger bank such as Wells Fargo? Or did you find any community bank gems similar to us? What is the largest individual position you hold in your portfolio? We look forward to reading your comments!
-Lanny and Bert, The Dividend Diplomats