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Rush Enterprises, Inc. (NASDAQ:RUSH.A) will pay a dividend of $0.18 on the 12th of June. Based on this payment, the dividend yield will be 1.4%, which is fairly typical for the industry.
Our free stock report includes 1 warning sign investors should be aware of before investing in Rush Enterprises. Read for free now.
Rush Enterprises' Future Dividend Projections Appear Well Covered By Earnings
Unless the payments are sustainable, the dividend yield doesn't mean too much. However, prior to this announcement, Rush Enterprises' dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.
The next year is set to see EPS grow by 10.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 22% by next year, which is in a pretty sustainable range.
See our latest analysis for Rush Enterprises
Rush Enterprises Doesn't Have A Long Payment History
The dividend's track record has been pretty solid, but with only 7 years of history we want to see a few more years of history before making any solid conclusions. Since 2018, the annual payment back then was $0.213, compared to the most recent full-year payment of $0.72. This implies that the company grew its distributions at a yearly rate of about 19% over that duration. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Rush Enterprises has seen EPS rising for the last five years, at 19% per annum. Rush Enterprises definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Rush Enterprises Looks Like A Great Dividend Stock
Overall, we like to see the dividend staying consistent, and we think Rush Enterprises might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Rush Enterprises that investors should take into consideration. Is Rush Enterprises 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.