Dividend Diplomats Recent Buy – CZNC

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

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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.

Summary

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

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14 thoughts on “Dividend Diplomats Recent Buy – CZNC

  1. I have been mulling over the idea of one day purchasing a regional bank in the US. I like the yields on CZNC and NYCB but haven’t looked much more than that. I need an American bank in my portfolio! I can’t bring myself to buy WFC, BAC, C, etc…their yield makes me sad.

    JT

    • JT,

      The yield of CZNC is definitely larger than the super large banks that you referenced . From that list of other banks listed, I would really only consider WFC as an alternative even though I am the proud shareholder of 11 BAC shares haha. Regional banks have a lot to offer and in my opinion, it is this little market of great companies that fly under the radar. The one thing I would caution is to make sure you understand the area in which they operate. Luckily for us, Lanny and I have a good pulse on the market where CZNC operates for a variety of reasons.

      Keep us updated with what you find! We are excited to see what you dig up and hopefully add to your portfolio.

      Bert

  2. Gah wish I saw this earlier, I literally just bought a few shares of Wells Fargo just to have a big bank and a safe bet as well with a decent ~3% yield. I will definitely be looking more into this stock in the coming days. Curious as to what the payout % is, I am sure it falls within your screened criteria though.

    PS. I got my dividend income for the year over $200 now I just need to wait for them to roll on in. Really need to get a DRIP account though.

    • Congrats on getting crossing the $200 mark! Which brokerage do you use now? We use Capital One Investing! If you don’t DRIP now, it is okay, you can just use the cash to purchase another great undervalued dividend growth stocks.

      and darn, sorry about the bad timing of the article! There will be other chances to buy in the future. WFC is a great company and you will love owning them in your portfolio for many years. The payout ratio is actually above the threshold in our stock screener. However, when we dove into the income statement further to see what caused the increase, we saw a few one-time type items that allowed us to gain comfort over the higher payout ratio. We don’t make a habit of it, but this was one where we were willing to give the green light.

      Bert

      • Hey Bert,

        Currently using Robinhood to avoid the trading fees as I am not working yet. I definitely want to get into an account that has a DRIP once I begin working to take full advantage of the compounding effect. WFC is definitely a great buy I think I will use WFC and possibly this bank as my financial sector that I will grow.

  3. I like the strategy of buying into regional banks. They don’t have the buying power of a major bank, but I suspect they are also less risk adverse because of this.

    • IH,

      Thank you very much – they are risk adverse and don’t have the sheer size to throw weight, I could agree on that. They don’t get into the “complicated” deals as others may be getting into. Further – there are fewer and fewer each year – so staying on top of that is very key. Love the yield and the community feel as well, of course. Thanks for the post IH!

      -Lanny

  4. Have to admit that I don’t have CZNC on my radar but hearing that both of you guys picked up some shares, I now have it on my watch list. Gotta love that 5% plus dividend yield. And the payout ratio isn’t too bad at 65%!

    Thanks for sharing your recent buys Lanny and Bert. Best wishes! AFFJ

    • AFFJ,

      Awesome that you popped in on there! The price doesn’t move too much – but with an announcement of a share buy back and these banks have been getting acquired left around in their asset range, it’s a decent play in a retirement account. I enjoy this industry and the community banking arena greatly and something about them is interesting to me. One of the community banks Bert and I both own is NWFL – to which they were $700M approximately in asset size but just bought a bank to essentially double. It’s very, very interesting. Thanks for the post, as always!

      -Lanny

    • DM,

      Thank you! Luckily – we have our ear to the ground in the midwest for banks as this is the industry we work in and we can see trends within the asset size these banks fall into. Very interesting trends out there on banks around this asset range. Thanks for coming by!

      -Lanny

  5. Hey guys,
    Finally figured out how to get by your spam filter. Just had to switch the name. Anyways this looks like an interesting company given the price and dividend. The payout ratio seems a bit high. Are you worried about dividend cuts or anything?
    Cheers,
    Dividend Family Guy

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