Expeditors International of Washington (NYSE:EXPD) Will Pay A Larger Dividend Than Last Year At $0.73

Expeditors International of Washington, Inc. (NYSE:EXPD) will increase its dividend from last year's comparable payment on the 17th of June to $0.73. Even though the dividend went up, the yield is still quite low at only 1.2%.

See our latest analysis for Expeditors International of Washington

Expeditors International of Washington's Dividend Is Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. However, prior to this announcement, Expeditors International of Washington's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 20.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 26%, which is in the range that makes us comfortable with the sustainability of the dividend.

Expeditors International of Washington Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.60 in 2014, and the most recent fiscal year payment was $1.46. This works out to be a compound annual growth rate (CAGR) of approximately 9.3% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Has Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Expeditors International of Washington has been growing its earnings per share at 6.5% a year over the past five years. Expeditors International of Washington definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Expeditors International of Washington Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 14 Expeditors International of Washington analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Expeditors International of Washington not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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