Read This Before Buying Schneider National Inc (NYSE:SNDR) For Its Dividend
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Schneider National Inc (NYSE:SNDR) has paid a dividend to shareholders in the last few years. It currently yields 1.0%. Does Schneider National tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
Check out our latest analysis for Schneider National
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is it the top 25% annual dividend yield payer?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share amount increased over the past?
Does earnings amply cover its dividend payments?
Will the company be able to keep paying dividend based on the future earnings growth?
How well does Schneider National fit our criteria?
The current trailing twelve-month payout ratio for the stock is 9.0%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect SNDR’s payout to increase to 14% of its earnings, which leads to a dividend yield of 1.1%. However, EPS is forecasted to fall to $1.6 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view Schneider National as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, Schneider National has a yield of 1.0%, which is on the low-side for Transportation stocks.
Next Steps:
After digging a little deeper into Schneider National’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three essential aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for SNDR’s future growth? Take a look at our free research report of analyst consensus for SNDR’s outlook.
Valuation: What is SNDR worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether SNDR is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
