Stock Analysis

Be Sure To Check Out Universal Logistics Holdings, Inc. (NASDAQ:ULH) Before It Goes Ex-Dividend

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NasdaqGS:ULH
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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 Universal Logistics Holdings, Inc. (NASDAQ:ULH) is about to go ex-dividend in just three days. This means that investors who purchase shares on or after the 26th of February will not receive the dividend, which will be paid on the 5th of April.

Universal Logistics Holdings's next dividend payment will be US$0.10 per share, and in the last 12 months, the company paid a total of US$0.42 per share. Calculating the last year's worth of payments shows that Universal Logistics Holdings has a trailing yield of 1.8% on the current share price of $23.92. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Universal Logistics Holdings has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Universal Logistics Holdings

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Universal Logistics Holdings paid out just 12% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Universal Logistics Holdings paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

Click here to see how much of its profit Universal Logistics Holdings paid out over the last 12 months.

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NasdaqGS:ULH Historic Dividend February 22nd 2021

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Universal Logistics Holdings, with earnings per share up 5.4% on average over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Universal Logistics Holdings's dividend payments per share have declined at 9.2% per year on average over the past nine years, which is uninspiring. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.

The Bottom Line

Is Universal Logistics Holdings worth buying for its dividend? Universal Logistics 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. Universal Logistics Holdings ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. In terms of investment risks, we've identified 2 warning signs with Universal Logistics Holdings and understanding them should be part of your investment process.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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