Werner Enterprises (NASDAQ:WERN) Is Increasing Its Dividend To $0.14

Werner Enterprises, Inc. (NASDAQ:WERN) has announced that it will be increasing its periodic dividend on the 19th of July to $0.14, which will be 7.7% higher than last year's comparable payment amount of $0.13. Although the dividend is now higher, the yield is only 1.1%, which is below the industry average.

View our latest analysis for Werner Enterprises

Werner Enterprises' 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. Werner Enterprises is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

The next year is set to see EPS grow by 9.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 15%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of $0.70 in 2013 to the most recent total annual payment of $0.52. Doing the maths, this is a decline of about 2.9% per year. A company that decreases its dividend over time generally isn't what we are looking for.

Werner Enterprises May Find It Hard To Grow The Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Earnings have grown at around 3.4% a year for the past five years, which isn't massive but still better than seeing them shrink. While growth may be thin on the ground, Werner Enterprises could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On Werner Enterprises' Dividend

Overall, we always like to see the dividend being raised, but we don't think Werner Enterprises will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Werner Enterprises that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield 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.