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The board of Schneider National, Inc. (NYSE:SNDR) has announced that it will pay a dividend of US$0.08 per share on the 11th of July. This means that the annual payment will be 1.3% of the current stock price, which is in line with the average for the industry.
Check out our latest analysis for Schneider National
Schneider National's Earnings Easily Cover the Distributions
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. But before making this announcement, Schneider National's earnings quite easily covered the dividend. However, with more than 75% of free cash flow being paid out to shareholders, future growth could potentially be constrained.
Over the next year, EPS is forecast to expand by 2.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 4.6% by next year, which is in a pretty sustainable range.
Schneider National Doesn't Have A Long Payment History
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The dividend has gone from US$0.20 in 2017 to the most recent annual payment of US$0.32. This means that it has been growing its distributions at 9.9% per annum over that time. Schneider National has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Schneider National has grown earnings per share at 21% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
Our Thoughts On Schneider National's Dividend
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Schneider National's payments, as there could be some issues with sustaining them into the future. While Schneider National is earning enough to cover the dividend, we are generally unimpressed with its future prospects. This company is not in the top tier of income providing stocks.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Schneider National that you should be aware of before investing. Is Schneider National 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.