Yahoo Finance Werner Enterprises (NASDAQ:WERN) Is Paying Out A Larger Dividend Than Last Year
Werner Enterprises, Inc. (NASDAQ:WERN) will increase its dividend on the 19th of July to $0.14, which is 7.7% higher than last year's payment from the same period of $0.13. This takes the annual payment to 1.1% of the current stock price, which unfortunately is below what the industry is paying.
See our latest analysis for Werner Enterprises
Werner Enterprises' Payment Has Solid Earnings Coverage
Even a low dividend yield can be attractive if it is sustained for years on end. Prior to this announcement, Werner Enterprises' earnings easily covered the dividend, but free cash flows were negative. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.
Looking forward, earnings per share is forecast to rise by 9.6% over the next year. If the dividend continues on this path, the payout ratio could be 15% by next year, which we think can be pretty sustainable going forward.
Dividend Volatility
While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2013, the annual payment back then was $0.70, compared to the most recent full-year payment of $0.52. This works out to be a decline of approximately 2.9% per year over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.
The Dividend's Growth Prospects Are Limited
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. However, Werner Enterprises has only grown its earnings per share at 3.4% per annum over the past five years. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.
Our Thoughts On Werner Enterprises' Dividend
In summary, while it's always good to see the dividend being raised, we don't think Werner Enterprises' payments are rock solid. While Werner Enterprises is earning enough to cover the payments, the cash flows are lacking. We don't think Werner Enterprises is a great stock to add to your portfolio if income is your focus.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Werner Enterprises that investors should take into consideration. Is Werner Enterprises not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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