Landstar System (NASDAQ:LSTR) Is Due To Pay A Dividend Of $2.00

The board of 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 that the annual payment will be 1.9% of the current stock price, which is in line with the average for the industry.

See our latest analysis for Landstar System

Landstar System's Future Dividend Projections Appear Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much. 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.

Over the next year, EPS is forecast to expand by 57.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 42%, which is in the range that makes us comfortable with the sustainability of the dividend.

Landstar System Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.28 in 2014 to the most recent total annual payment of $3.44. This implies that the company grew its distributions at a yearly rate of about 29% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. However, Landstar System's EPS was effectively flat over the past five years, which could stop the company from paying more every year.

In Summary

Overall, we think Landstar System is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Landstar System that investors should know about before committing capital to this stock. 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.