Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Universal Truckload Services in Focus
Headquartered in Warren, Universal Truckload Services (ULH) is a Transportation stock that has seen a price change of 15.2% so far this year. Currently paying a dividend of $0.32 per share, the company has a dividend yield of 2.02%. In comparison, the Transportation - Truck industry's yield is 0.44%, while the S&P 500's yield is 2%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.42 is up 9.1% from last year. Over the last 5 years, Universal Truckload Services has increased its dividend 1 times on a year-over-year basis for an average annual increase of 8.12%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Universal Truckload's payout ratio is 18%, which means it paid out 18% of its trailing 12-month EPS as dividend.
ULH is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $2.12 per share, with earnings expected to increase 1.92% from the year ago period.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, ULH is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Universal Logistics Holdings, Inc. (ULH) : Free Stock Analysis Report
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