Stock Analysis

Universal Logistics Holdings (NASDAQ:ULH) Will Pay A Dividend Of US$0.10

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NasdaqGS:ULH
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The board of Universal Logistics Holdings, Inc. (NASDAQ:ULH) has announced that it will pay a dividend of US$0.10 per share on the 4th of January. This makes the dividend yield 2.0%, which will augment investor returns quite nicely.

View our latest analysis for Universal Logistics Holdings

Universal Logistics Holdings' Payment Has Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, Universal Logistics Holdings was earning enough to cover the dividend, but free cash flows weren't positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Over the next year, EPS is forecast to expand by 13.2%. If the dividend continues on this path, the payout ratio could be 14% by next year, which we think can be pretty sustainable going forward.

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NasdaqGS:ULH Historic Dividend November 4th 2021

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2011, the dividend has gone from US$1.00 to US$0.42. Doing the maths, this is a decline of about 8.3% per year. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Universal Logistics Holdings has impressed us by growing EPS at 20% per 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.

Our Thoughts On Universal Logistics Holdings' Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 2 warning signs for Universal Logistics Holdings (of which 1 shouldn't be ignored!) you should know about. Looking for more high-yielding dividend ideas? Try our curated list 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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