Last update on 2024-06-27

C.H. Robinson Worldwide (CHRW) - Dividend Analysis (Final Score: 8/8)

Discover the comprehensive dividend analysis of C.H. Robinson Worldwide (CHRW) using an 8-criteria scoring system, achieving a perfect 8/8 score.

Short Analysis - Dividend Score: 8

We're running C.H. Robinson Worldwide (CHRW) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Explain the criterion for C.H. Robinson Worldwide (CHRW) and why it is important to consider

Dividend yield of 2.8244% is higher than the industry average of 2.27%. Considering C.H. Robinson's historical dividend yields and the trend over the past 20 years, the company has shown consistent growth in its dividend payouts. From a low of 0.9496% in 2003 to the current high of 2.8244% in 2023, C.H. Robinson's dividend growth suggests financial robustness and a commitment to returning value to shareholders. In contrast, the industry's average yield has been more volatile, peaking at 3.99% in 2022 and showing significant variability compared to C.H. Robinson's steadier upward trend. This indicates that C.H. Robinson has been more stable and reliable in its dividend payments, which is a positive indicator for future dividends. This trend is good for C.H. Robinson's income-focused investors.

Average annual Growth Rate higher than 5% in the last 20 years?

The dividend growth rate criterion measures the percentage increase in dividend payments over a specified period. A growth rate higher than 5% is considered encouraging for investors as it indicates stable and increasing returns from dividend payments.

Over the past 20 years, C.H. Robinson Worldwide (CHRW) has had an average dividend growth rate of approximately 16.5815%. This growth rate significantly exceeds the 5% threshold, which generally signals strong financial health and commitment to returning value to shareholders. Although there are years where the dividend per share ratio has decreased (notably in 2009 and 2015), the overall trend shows positive dividend growth. For instance, years like 2006 and 2021 exhibit particularly substantial increases. The long-term upward trend highlights CHRW’s consistent ability to generate earnings and distribute them efficiently to its investors, making it an appealing choice for dividend-seeking investors. This trend can indeed be regarded as good for this criterion.

Average annual Payout Ratio lower than 65% in the last 20 years?

The average payout ratio is a crucial metric that shows the portion of earnings a company distributes to its shareholders in dividends. A ratio below 65% is typically considered sustainable.

C.H. Robinson Worldwide (CHRW) has maintained an average payout ratio of approximately 45.42% over the past 20 years. This ratio is well below the threshold of 65%, indicating that the company is distributing dividends sustainably without sacrificing potential growth or exposing itself to financial strain. The relatively stable and modest payout ratio not only implies disciplined financial management but also ensures that the company retains enough earnings to reinvest in future growth. This trend demonstrates a strong and prudent approach towards balancing shareholder returns and reinvestment for future business expansion. However, it is also noteworthy that the ratio peaked at nearly 89% in 2023, which could signal a one-time event or potential future risk if viewed in isolation. Overall, the trend is favorable.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings.

One way to measure if dividends are well covered is to compare the Dividend per Share (DPS) against the Earnings per Share (EPS). A rule of thumb is that the payout ratio (DPS/EPS) should be lower than 0.7 or 70%. A lower payout ratio suggests that a company has enough earnings to cover its dividends and potentially reinvest in its growth. For C.H. Robinson Worldwide (CHRW), their payout ratio over the years has remained mostly below the 0.70 threshold, indicating a conservative approach toward dividends. This is beneficial especially during downturns or times of economic uncertainty, offering the company financial flexibility.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow means the company's free cash flow (FCF) is sufficient to cover its dividend payouts. It's important to ensure the company can comfortably distribute dividends without jeopardizing its liquidity or growth investments.

Evaluating the trend from 2003 to 2023 for C.H. Robinson Worldwide's (CHRW) dividend coverage, we see a fluctuating yet generally positive scenario. The ratio of FCF to dividend payout shows mostly healthy coverage, often above 0.5. In recent years, e.g., 2021, the FCF coverage reached an exceptionally high level of 11.54. This indicates a very strong capacity to pay dividends. Overall, despite occasional dips (e.g., 2022 with a coverage of 0.19), the trend suggests robust and sustainable dividend coverage in most years, reflecting well on CHRW’s financial health and its ability to reward shareholders. However, the extreme fluctuation in some years calls for monitored financial forecasting to ensure consistency.

Stable Dividends Since the Company Began Paying Dividends?

Explain stable dividends over the past 20 years for CHRW and why it is important to consider

Stable dividends over an extended period are a hallmark of a reliable and mature company. Consistency in dividend payments, particularly without significant drops, attracts income-focused investors who seek predictable returns. Given this stability, it’s critical to assess how C.H. Robinson Worldwide (CHRW) performs in this criterion.

Dividends Paid for Over 25 Years?

Explain the criterion for C.H. Robinson Worldwide (CHRW) and why it is important to consider

Criterion 6 involves analyzing whether C.H. Robinson Worldwide (CHRW) has consistently paid dividends for over 25 years. This criterion is crucial for long-term investors seeking financial stability and income generation. A consistent dividend history often signals strong, stable cash flow and a shareholder-friendly management philosophy.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases over the past 20 years indicate a company’s consistent strategy to return value to shareholders and optimize capital structure, enhancing shareholder value.

Over the past 20 years, C.H. Robinson Worldwide (CHRW) has demonstrated a commitment to repurchasing its stock, evident in 17 out of the 21 years showing a reduction in the number of shares. Starting from 172,138,000 shares in 2003, the company successfully reduced this number to 118,551,000 shares by 2023. This consistent reduction suggests a disciplined approach to capital allocation, positively impacting earnings per share, return on equity, and overall shareholder value. The average share repurchase rate of -1.8296% annually further strengthens this trend, indicating a robust buyback strategy. This trend is positive and suggests strong financial health and management’s confidence in the company’s future prospects.