Which US Truckload Carrier Holds First Place in Dividend Growth?
<p>Among major truckload companies, in 1Q16, Werner Enterprises (WERN) declared the highest dividend growth, at $0.06 per share, which is a 20% YoY increase.</p>
Trucking is a fragmented, capital-intensive industry, and so intense competition among operators normally requires to reinvest substantially in the business. This means that usually, these carriers would increase their dividends per share, either due to strong cash flows or poor growth prospects in hindsight.
Werner Enterprises records highest dividend growth
In the first quarter 2016, Werner Enterprises (WERN) declared a dividend of $0.06 per share. This implies a growth of 20% from the corresponding period last year. Based on the company’s closing price of $24.3 on June 17, this translates into an annual yield of nearly 1%. Since July 1987, WERN has paid a cash dividend each consecutive quarter.
After WERN, Landstar System (LSTR) recorded the highest growth in dividends. The company’s dividend per share was $0.08, representing a rise of 14.3% on a YoY (year-over-year) basis. However, the dividend yield of the company is low at 0.5%. Investors should note that LSTR operates an asset-light transportation business—and that it recorded a rise of 46% in operating cash flows in 1Q16.
Knight Transportation (KNX) and Heartland Express (HTLD) maintained the same levels of dividends in the first quarter of 2016. KNX and HTLD’s dividend per share was $0.06 and $0.02, respectively, which represents an annualized yield of 0.90% for KNX and 0.5% for HTLD.
You should note that beginning December 2004, KNX has paid a quarterly cash dividend in each consecutive quarter. Heartland has paid consecutive cash dividends for the past 50 quarters. Since Swift Transportation (SWFT) follows a policy of continuous reinvestment in the business for development expansion, it has not indulged in the payment of dividends.
Major US airlines (DAL) and railroads make up 6.7% and 4.0%, respectively, of the iShares Global Industrials ETF (EXI). EXI has 1.2% and 2.1% in global express delivery companies FedEx (FDX) and United Parcel Service (UPS), respectively.
In the next part, we’ll assess the impact of hours-of-service rules on the operations of truckload companies.