Expeditors International of Washington's (NASDAQ:EXPD) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Expeditors International of Washington, Inc. (NASDAQ:EXPD) has announced that it will be paying its dividend of $0.69 on the 15th of June, an increased payment from last year's comparable dividend. Even though the dividend went up, the yield is still quite low at only 1.2%.

See our latest analysis for Expeditors International of Washington

Expeditors International of Washington's Earnings Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, Expeditors International of Washington was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

EPS is set to fall by 25.7% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 24%, which is comfortable for the company to continue in the future.

Expeditors International of Washington Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.56 in 2013, and the most recent fiscal year payment was $1.38. This works out to be a compound annual growth rate (CAGR) of approximately 9.4% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

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 Expeditors International of Washington has been growing its earnings per share at 22% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like Expeditors International of Washington's Dividend

Overall, a dividend increase is always good, and we think that Expeditors International of Washington is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Expeditors International of Washington 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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