Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Knight-Swift Transportation Holdings Inc. (NYSE:KNX) is about to go ex-dividend in just 4 days. You can purchase shares before the 2nd of March in order to receive the dividend, which the company will pay on the 27th of March.
Knight-Swift Transportation Holdings’s next dividend payment will be US$0.08 per share. Last year, in total, the company distributed US$0.32 to shareholders. Last year’s total dividend payments show that Knight-Swift Transportation Holdings has a trailing yield of 0.9% on the current share price of $35.98. If you buy this business for its dividend, you should have an idea of whether Knight-Swift Transportation Holdings’s dividend is reliable and sustainable. That’s why we should always check whether the dividend payments appear sustainable, and if the company is growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Knight-Swift Transportation Holdings has a low and conservative payout ratio of just 13% of its income after tax.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we’re encouraged by the steady growth at Knight-Swift Transportation Holdings, with earnings per share up 7.2% on average over the last five years. Earnings per share have been increasing steadily and management is reinvesting almost all of the profits back into the business. This is an attractive combination, because when profits are reinvested effectively, growth can compound, with corresponding benefits for earnings and dividends in the future.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Knight-Swift Transportation Holdings has delivered an average of 4.8% per year annual increase in its dividend, based on the past ten years of dividend payments. We’re glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
To Sum It Up
Should investors buy Knight-Swift Transportation Holdings for the upcoming dividend? Knight-Swift Transportation Holdings has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Overall, Knight-Swift Transportation Holdings looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Wondering what the future holds for Knight-Swift Transportation Holdings? See what the 15 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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