There are three days left to buy Werner Enterprises, Inc. (NASDAQ: WERN) before the ex-dividend date


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Werner Enterprises, Inc. (NASDAQ: WERN) is set to trade ex-dividend within the next three days. The ex-dividend date is a business day before a company’s registration date, which is the date the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because any share transaction must have been settled before the registration date to be eligible for a dividend. Therefore, if you buy Werner Enterprises shares on or after July 2, you will not be able to receive the dividend when it is paid on July 20.

The company’s next dividend payment will be US $ 0.12 per share, compared to last year when the company paid a total of US $ 0.40 to shareholders. Looking at the last 12 months of distributions, Werner Enterprises has a rolling return of about 1.1% on its current price of $ 44.59. Dividends are a major contributor to returns on investment for long-term holders, but only if the dividend continues to be paid. It is therefore necessary to check whether dividend payments are covered and whether profits are growing.

If a company pays more dividends than it has earned, then the dividend could become unsustainable – which is not an ideal situation. Werner Enterprises has a low and conservative payout ratio of only 13% of its after-tax income. A useful secondary check may be to assess whether Werner Enterprises has generated enough free cash flow to pay its dividend. It has paid an unsustainable 247% of its free cash flow as dividends over the past 12 months, which is worrying. It is quite difficult to pay more than what you earn, so we wonder how Werner Enterprises intends to continue to fund this dividend, or if it might be forced to reduce the payment.

Werner Enterprises paid less dividends than it made a profit, but unfortunately it did not generate enough cash to cover the dividend. If this were to happen again, it would pose a risk to Werner Enterprises’ ability to maintain its dividend.

Click on here to see the company’s payout ratio, as well as analysts’ estimates of its future dividends.

NasdaqGS: WERN Historical Dividend June 28, 2021

Have profits and dividends increased?

Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it’s easier to raise the dividend when earnings rise. If profits fall enough, the company could be forced to cut its dividend. Luckily for readers, Werner Enterprises’ earnings per share have grown 10% per year for the past five years. Profits have grown at a decent pace, but we’re concerned that dividend payments have consumed most of the company’s cash flow over the past year.

Most investors will primarily assess a company’s dividend prospects by checking the historical rate of dividend growth. Werner Enterprises dividend payouts per share have declined by 10% per year on average over the past 10 years, which is not inspiring. It is unusual to see earnings per share increase at the same time as dividends per share are falling. We hope this is because the company is heavily reinvesting in their business, but it could also suggest that the business is erratic.

To summarize

Is Werner Enterprises worth buying out for its dividend? We like that Werner Enterprises has been able to grow its earnings per share at a good pace and reinvest most of its earnings back into the business. However, we note with some concern the high cash flow payout ratio. To sum up, Werner Enterprises looks good on this scan, even if it doesn’t seem like an exceptional opportunity.

Have you ever wondered what the future holds for Werner Enterprises? Discover the forecasts of the 15 analysts we follow, with this visualization of its historical and future estimated profits and cash flows

A common investment mistake is to buy the first interesting stock you see. Here you can find a list of promising dividend-paying stocks with a yield above 2% and a future dividend.

This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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