Two months ago was my last individual stock purchase. The market was showing signs of distress and on Thursday, August 28th, a purchase was made. This has been a familiar face to not just me, but both dividend diplomats and the price was right for an additional purchase. The position I further enhanced was primarily due to industry knowledge, yield and direction financial institutions are heading. Let’s find out why I purchased more shares in Citizens and Northern (CZNC)!
Citizens & Northern (CZNC) Stock Purchase
Well, it wasn’t the first time I bought CZNC, 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 this wasn’t on my August stock watch list, and I recently invested a bigger position in April, I wanted to own more shares. Further, I still had $3,316 left to use for my traditional IRA account, which was in relation to Part 3 of my tax minimization strategy, and I thought – what better use than for Citizens & Northern (CZNC). Why was this even more important to place into that account? Well, at the price I paid, $20.75, the yield was at 5.01% (therefore, minimizing taxes on those dividends) and the financial institution industry is on a consolidation track, whereas – if they get acquired at some point, I won’t have the immediate capital gains taxation as well. A win-win, for now, in my book. Funny enough, it coincidentally tied into Bert making an additional purchase into Target (TGT), and I had put the limit order on this stock, but since it is so thinly traded, took an additional day or so for the price to trigger.
Due to the industry knowledge and the recent price decrease in CZNC, as they were trading as high as $22.00 at one point in early February, this came heavily back on my radar. A $1.25 drop from $22 equates to a 5.68% drop. Further, they announced a share-buyback program of 5% of all shares outstanding, and all earnings remaining consistent, would lead to a share price of well into the mid $21 range based on the latest purchase price we had in April. Further, this bank falls into that “sweet-spot” as it relates to size in that “just over $1 billion in total assets”. Which means, they will either acquire further banks or they will become acquired at some point. With a 5%+ yield, I definitely don’t mind being paid a consistent dividend, pick up more shares and to also have the potential of this event in my back pocket. They have taken their share of 6 months worth of heft provision for loan losses, however, I would expect that figure to normalize the last 6 months and earnings should be better.
Lanny’s CZNC Stock Purchase Summary
I deployed a total capital amount of $1,687.70 to purchase 81 shares of CZNC at a market price of $20.75 plus a $6.95 transaction fee,. 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 not made a purchase in quite some time, the price has come down over 5% in the near term and I wanted to save some capital for additional depreciation of the investment or a different investment in the traditional IRA if this does occur. The yield was at 5.01% 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 $84.24 to my forward dividend income based on my portfolio. Further concluding thoughts…
Is CZNC a large cap stock? No. Is this a Dividend Aristocrat? No. On the watch list? No. What happened is that I was able to find the right stock, with the right yield, in the right industry, for the right price. This adds great yield, great spot in a tax-advantaged account and I know own a whopping 229.1927 shares that is producing $238.36 per year or $59.59 on a quarterly basis. On each dividend, I am almost picking up an additional 3 shares, which I’m completely excited for, all mostly in tax-advantaged accounts.
What do you guys think of this purchase? I still have my eyes on a few entities in Target (TGT), T. Rowe Price (TROW) and Pfizer (PFE), but in the meantime, I wanted to capture more shares at the price point CZNC delivered. Thoughts on this company? Any insight or further ideas/suggestions? I have noticed quite a bit more of stock purchasing from the slight depreciation last week, hoping it continues for all of us! Thanks and hope everyone had a great weekend, appreciate you for stopping by.
-Lanny