Covenant Logistics Group (NASDAQ:CVLG) Is Paying Out A Dividend Of $0.11

Covenant Logistics Group, Inc. (NASDAQ:CVLG) has announced that it will pay a dividend of $0.11 per share on the 29th of March. This payment means the dividend yield will be 0.8%, which is below the average for the industry.

View our latest analysis for Covenant Logistics Group

Covenant Logistics Group's Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. Covenant Logistics Group is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

The next year is set to see EPS grow by 11.4%. If the dividend continues on this path, the payout ratio could be 9.4% by next year, which we think can be pretty sustainable going forward.

Covenant Logistics Group Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. Since 2022, the annual payment back then was $0.25, compared to the most recent full-year payment of $0.44. This means that it has been growing its distributions at 33% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Covenant Logistics Group has been growing its earnings per share at 14% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Covenant Logistics Group is earning enough to cover the payments, the cash flows are lacking. We don't think Covenant Logistics Group is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 4 warning signs for Covenant Logistics Group that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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