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It looks like Knight-Swift Transportation Holdings Inc. (NYSE:KNX) is about to go ex-dividend in the next 3 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase Knight-Swift Transportation Holdings' shares on or after the 9th of June will not receive the dividend, which will be paid on the 27th of June.
The company's next dividend payment will be US$0.12 per share. Last year, in total, the company distributed US$0.48 to shareholders. Looking at the last 12 months of distributions, Knight-Swift Transportation Holdings has a trailing yield of approximately 1.0% on its current stock price of $49.03. 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 Knight-Swift Transportation Holdings has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Knight-Swift Transportation Holdings
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. Knight-Swift Transportation Holdings has a low and conservative payout ratio of just 8.4% of its income after tax. A useful secondary check can be to evaluate whether Knight-Swift Transportation Holdings generated enough free cash flow to afford its dividend. It paid out 9.3% of its free cash flow as dividends last year, which is conservatively low.
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.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Knight-Swift Transportation Holdings's earnings have been skyrocketing, up 34% per annum for the past five years. Knight-Swift Transportation Holdings earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'