Werner Enterprises (NASDAQ:WERN) Is Increasing Its Dividend To US$0.13
Werner Enterprises, Inc. (NASDAQ:WERN) has announced that it will be increasing its dividend on the 19th of July to US$0.13, which will be 8.3% higher than last year. Despite this raise, the dividend yield of 1.3% is only a modest boost to shareholder returns.
See our latest analysis for Werner Enterprises
Werner Enterprises' Dividend Is Well Covered By Earnings
If it is predictable over a long period, even low dividend yields can be attractive. Werner Enterprises is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.
EPS is set to fall by 0.9% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 13%, which is comfortable for the company to continue in the future.
Dividend Volatility
The company's dividend history has been marked by instability, with at least 1 cut in the last 10 years. The dividend has gone from US$1.80 in 2012 to the most recent annual payment of US$0.48. Dividend payments have fallen sharply, down 73% over that time. A company that decreases its dividend over time generally isn't what we are looking for.
The Dividend Looks Likely To Grow
Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. We are encouraged to see that Werner Enterprises has grown earnings per share at 31% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.
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 would be a touch cautious of relying on this stock primarily for the dividend income.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 2 warning signs for Werner Enterprises you should be aware of, and 1 of them is a bit unpleasant. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
