Landstar System (NASDAQ:LSTR) Has Announced A Dividend Of $2.00
Landstar System, Inc. (NASDAQ:LSTR) has announced that it will pay a dividend of $2.00 per share on the 21st of January. This means the annual payment is 2.5% of the current stock price, which is above the average for the industry.
Landstar System's Payment Could Potentially Have Solid Earnings Coverage
A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, Landstar System was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
The next year is set to see EPS grow by 114.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 48% by next year, which is in a pretty sustainable range.
See our latest analysis for Landstar System
Landstar System Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $0.28 in 2015, and the most recent fiscal year payment was $3.60. This works out to be a compound annual growth rate (CAGR) of approximately 29% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
Landstar System May Find It Hard To Grow The Dividend
The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. In the last five years, Landstar System's earnings per share has shrunk at approximately 2.6% per annum. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.
Our Thoughts On Landstar System's Dividend
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. With shrinking earnings, the company may see some issues maintaining the dividend even though they look pretty sustainable for now. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
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. As an example, we've identified 1 warning sign for Landstar System that you should be aware of before investing. Is Landstar System not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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