Citigroup (NYSE:) is a diversified financial services holding company that has operations in North America, Latin America, Asia, Europe, the Middle East, and Africa.

Global Consumer Banking and Institutional Clients Group are the two main segments of the company.

Customers can access retail services through their checking, savings, credit card, or lending accounts. It offers financial institutions brokerage, corporate lending, advisory and investment banking services.

The stock is a strong buy. (See C stock charts on TipRanks)

Steady Dividend Growth

When the housing market crashed in 2008, it sent the country into a long and deep recession known as the Great Recession. Citigroup was among the worst-hit financial institutions. Citi stock was trading at less than $1 per share. In 2011, Citi had to perform a reverse dividend in order to be listed on any major stock exchange.

Although the dividend was scrapped in 2010, it was reinstated by Citi in 2011, when it paid $0.03/share — a small amount for investors.

The company has been thriving for a decade and is now rewarding its shareholders.

Citigroup is an excellent dividend growth stock. Dividend growth stocks that increase their dividends consistently so shareholders who own and keep it have greater effective yields over time.

The company didn’t raise its dividend during the COVID-19 epidemic, but it has raised the dividend for six previous years.

With positive results again being posted, it is possible that the company will raise its dividend. Below is the chart showing the average annual dividend over the past 10 years. It will likely remain the same as the current value.

Chart created by author with publicly available dividend data

A Dividend Raise Is Likely

The current dividend yield is around 2.8%, and the dividend is very safe.

Citigroup’s history has shown that it pays out approximately 30% of its earnings per share in dividends. This ratio increased during the pandemic when earnings per share fell from $8.08 to $4.74 for diluted shares in 2019 and 2020.

For shareholders, the good news is that in the last four quarters, diluted earnings have improved to $9.75 per share. Citigroup will release its Q3 2021 earnings before the market opens on October 14. It could be a hint as to the future dividend hike.

Enticing Valuation

Citigroup trades at an attractive price-to-earnings ratio of 7.4. Inflation is likely to cause an increase in interest rates.

As lending becomes more profitable, Citi will reap the benefits of a higher interest rate environment. Citi continues to buy back shares. This is basically a tax-free return to shareholders.

The company bought back $2.9 billion worth of shares in Q2 2021. It is almost 2% of current market capital. This price clearly shows that management believes there is value in these shares.

Wall Street’s Take

Wall Street analysts are extremely bullish on C stock, with a Strong Buy consensus rating based seven unanimous Buys.

The average C price target of $88.71 implies 24% upside potential. Investors in Citigroup do not buy for capital gains. They also purchase dividend yield.

Summary on Citigroup

Citigroup has weathered what is, hopefully, the worst of the COVID-19 pandemic.

In the six-year history of the company, dividends have increased in every year. One is on its way, as the EPS has risen significantly.

Dividend investors can feel very secure as share buybacks increase shareholder value. Citigroup has significant upside potential and is both a dividend-paying stock and a value investment.

Disclosure: At the time of publication, Bradley Guichard had a position in C.

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