Universal Logistics Holdings (NASDAQ:ULH) Has Affirmed Its Dividend Of $0.105
Universal Logistics Holdings, Inc.'s (NASDAQ:ULH) investors are due to receive a payment of $0.105 per share on 2nd of January. This means the annual payment is 2.8% of the current stock price, which is above the average for the industry.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Universal Logistics Holdings' stock price has reduced by 39% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.
Universal Logistics Holdings Might Find It Hard To Continue The Dividend
A big dividend yield for a few years doesn't mean much if it can't be sustained. Despite not generating a profit, Universal Logistics Holdings is still paying a dividend. The company is also yet to generate cash flow, so the dividend sustainability is definitely questionable.
If the trend of the last few years continues, EPS will grow by 2.6% over the next 12 months. While it is good to see income moving in the right direction, it still looks like the company won't achieve profitability. Unless this happens fairly soon, the dividend could start to come under pressure.
View our latest analysis for Universal Logistics Holdings
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the annual payment back then was $0.28, compared to the most recent full-year payment of $0.42. This implies that the company grew its distributions at a yearly rate of about 4.1% over that duration. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.
Dividend Growth May Be Hard To Achieve
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. However, Universal Logistics Holdings has only grown its earnings per share at 2.6% per annum over the past five years. With EPS growth hard to come by and the company not turning a profit, we wouldn't be particularly optimistic about the growth prospects for Universal Logistics Holdings' dividend in the future.
Universal Logistics Holdings' Dividend Doesn't Look Sustainable
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The payments are bit high to be considered sustainable, and the track record isn't the best. Overall, we don't think this company has the makings of a good income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 2 warning signs for Universal Logistics Holdings that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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