Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) is about to go ex-dividend in just 4 days. You can purchase shares before the 5th of March in order to receive the dividend, which the company will pay on the 27th of March.
C.H. Robinson Worldwide's next dividend payment will be US$0.51 per share. Last year, in total, the company distributed US$2.04 to shareholders. Last year's total dividend payments show that C.H. Robinson Worldwide has a trailing yield of 3.0% on the current share price of $68.68. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether C.H. Robinson Worldwide has been able to grow its dividends, or if the dividend might be cut.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. C.H. Robinson Worldwide paid out a comfortable 48% of its profit last year. A useful secondary check can be to evaluate whether C.H. Robinson Worldwide generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 36% of the free cash flow it generated, which is a comfortable payout ratio.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see C.H. Robinson Worldwide earnings per share are up 6.6% per annum over the last five years. The company is retaining more than half of its earnings within the business, and it has been growing earnings at a decent rate. Organisations that reinvest heavily in themselves typically get stronger over time, which can bring attractive benefits such as stronger earnings and dividends.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last ten years, C.H. Robinson Worldwide has lifted its dividend by approximately 7.8% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
Is C.H. Robinson Worldwide an attractive dividend stock, or better left on the shelf? Earnings per share have been growing moderately, and C.H. Robinson Worldwide is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. It might be nice to see earnings growing faster, but C.H. Robinson Worldwide is being conservative with its dividend payouts and could still perform reasonably over the long run. Overall we think this is an attractive combination and worthy of further research.
Wondering what the future holds for C.H. Robinson Worldwide? See what the 18 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.