Knight-Swift Transportation Holdings' (NYSE:KNX) Dividend Will Be Increased To $0.14

Knight-Swift Transportation Holdings Inc. (NYSE:KNX) has announced that it will be increasing its dividend from last year's comparable payment on the 27th of June to $0.14. Despite this raise, the dividend yield of 1.0% is only a modest boost to shareholder returns.

Check out our latest analysis for Knight-Swift Transportation Holdings

Knight-Swift Transportation Holdings' Earnings Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, Knight-Swift Transportation 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.

Looking forward, earnings per share is forecast to rise by 11.3% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 13%, which is in the range that makes us comfortable with the sustainability of the dividend.

Knight-Swift Transportation Holdings Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was $0.24, compared to the most recent full-year payment of $0.56. This means that it has been growing its distributions at 8.8% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Knight-Swift Transportation Holdings hasn't seen much change in its earnings per share over the last five years. While EPS growth is quite low, Knight-Swift Transportation Holdings has the option to increase the payout ratio to return more cash to shareholders.

Knight-Swift Transportation Holdings 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. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Knight-Swift Transportation Holdings that you should be aware of before investing. Is Knight-Swift Transportation Holdings not quite the opportunity you were looking for? Why not check out our selection of top 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.