Wabash National (NYSE:WNC) Has Announced A Dividend Of $0.08

October 04, 2022
  •  Updated
November 21, 2022
Source: Shutterstock

The board of Wabash National Corporation (NYSE:WNC) has announced that it will pay a dividend on the 27th of October, with investors receiving $0.08 per share. This means that the annual payment will be 2.0% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Wabash National

Wabash National's Earnings Easily Cover The Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Before this announcement, Wabash National was paying out 78% of earnings, but a comparatively small 56% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Analysts expect a massive rise in earnings per share in the next year. Assuming the dividend continues along recent trends, we estimate that the payout ratio could reach 16%, which is in a comfortable range for us.

NYSE:WNC Historic Dividend October 4th 2022

Wabash National Is Still Building Its Track Record

It is great to see that Wabash National has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 6 years was $0.24 in 2016, and the most recent fiscal year payment was $0.32. This works out to be a compound annual growth rate (CAGR) of approximately 4.9% a year over that time. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

Dividend Growth Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Wabash National's earnings per share has shrunk at 24% a year over the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.

Our Thoughts On Wabash National's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular 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 4 warning signs for Wabash National you should be aware of, and 1 of them is potentially serious. 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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