Stock Analysis

Universal Logistics Holdings' (NASDAQ:ULH) Dividend Will Be $0.105

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NasdaqGS:ULH
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Universal Logistics Holdings, Inc. (NASDAQ:ULH) will pay a dividend of $0.105 on the 3rd of January. This payment means the dividend yield will be 1.3%, which is below the average for the industry.

Check out the opportunities and risks within the US Transportation industry.

Universal Logistics Holdings' Earnings Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before making this announcement, Universal Logistics Holdings was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to fall by 1.8%. If the dividend continues along recent trends, we estimate the payout ratio could be 7.8%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

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NasdaqGS:ULH Historic Dividend November 1st 2022

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2012, the annual payment back then was $1.00, compared to the most recent full-year payment of $0.42. The dividend has shrunk at around 8.3% a year during that period. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Looks Likely To Grow

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Universal Logistics Holdings has seen EPS rising for the last five years, at 91% per annum. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Universal Logistics Holdings Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Universal Logistics Holdings (1 doesn't sit too well with us!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

What are the risks and opportunities for Universal Logistics Holdings?

Universal Logistics Holdings, Inc. provides transportation and logistics solutions in the United States, Mexico, Canada, and Colombia.

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Rewards

  • Price-To-Earnings ratio (6.8x) is below the US market (15.5x)

  • Earnings are forecast to grow 2.1% per year

  • Earnings grew by 105.2% over the past year

Risks

  • Has a high level of debt

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Universal Logistics Holdings

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