Last update on 2024-06-27

Heartland Express (HTLD) - Dividend Analysis (Final Score: 5/8)

In-depth dividend analysis of Heartland Express (HTLD), scoring 5/8. Explore its performance and stability using an 8-criteria scoring system. Discover more.

Short Analysis - Dividend Score: 5

We're running Heartland Express (HTLD) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Heartland Express (HTLD) scored 5 out of 8 in a dividend analysis based on an 8-criteria system. The analysis shows that HTLD has a lower dividend yield than the industry average and inconsistent dividend growth, with a recent yield of 0.561%. The payout ratio is generally below 65%, which is good, but its dividends are not consistently well-covered by free cash flow, posing risks. The company has not paid dividends for over 25 years, but it does show consistency in stock repurchases, indicating strong cash flow management overall.

Insights for Value Investors Seeking Stable Income

Heartland Express (HTLD) has some positive aspects, like a controlled payout ratio and consistent stock repurchases. However, the inconsistency in dividend payments and coverage by cash flow makes it less attractive for income-focused investors. It may be worth considering if you are looking for long-term growth rather than reliable dividend income. For consistent dividend returns, you might want to explore other options.

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?

Dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It is essential for investors seeking income.

As of 2023, Heartland Express (HTLD) has a dividend yield of 0.561%, which is lower than the industry average of 0.67%. Over the past 20 years, HTLD's dividend yield has been highly volatile, with significant peaks in 2007, 2010, 2012, and 2021. The recent yield of 0.561% is among the lower figures in its history, potentially signaling a period of recovery or stability following previous peaks. However, this lower yield might not be attractive for income-focused investors especially when compared to the industry's average. It suggests that the company may be conserving capital or its stock price has performed better relative to dividend growth.

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

Dividend Growth Rate represents the annualized percentage rate of growth of a company’s dividend payments over a period of time. It’s crucial as it demonstrates the company's capacity to increase profits and distribute a portion of those profits to shareholders over time.

The Dividend Growth Rate for Heartland Express (HTLD) clearly does not portray a stable upward trend over the last 20 years. Many of the years exhibit negative growth or zero dividends, indicating inconsistency in the distributions to shareholders. The average dividend growth rate stands at approximately 267.89%, but this is misleading due to sporadic high amounts likely from special dividends rather than a consistent increase. This irregular pattern suggests a less favorable trend for investors relying on growing dividend income and points to inconsistency in company profits or dividend policy, which is generally considered unfavorable for dividend-focused investors.

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

Explain the criterion for Heartland Express (HTLD) and why it is important to consider.

The Average Payout Ratio should be lower than 65% in the last 20 years to ensure that the company is returning a reasonable portion of its earnings to shareholders without jeopardizing its ability to grow and maintain operational stability.

Dividends Well Covered by Earnings?

Dividends should be covered by earnings to ensure the company can sustain its payout without compromising its financial health. This reflects positively on the stock's safety.

Over the years, Heartland Express (HTLD) has shown variable earnings per share (EPS) and dividends per share (DPS). For instance, in 2007, the dividend per share was exceptionally high at $2.08, resulting in a very high DPS/EPS ratio of 2.67, which suggests possible over-distribution. Meanwhile, in 2023, the ratio rebounded precariously to 0.427 after dipping significantly the previous year. Steady coverage in most years indicates a balanced approach, but spikes suggest one-off events or special dividends. The consistent lower ratios in other years (generally below 0.12) indicate solid dividend coverage by EPS, which enhances sustainability and reliability.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow means that the company's dividend payments are easily covered by the cash generated from its operations. It is crucial because it indicates the sustainability of dividend payments without compromising the company's operational needs.

From 2003 to 2007, Heartland Express (HTLD) experienced positive coverage of its dividends by cash flow, peaking in 2007 with 2.688x coverage. This indicates a robust position where dividends were significantly sustained by operating cash flow. However, various years such as 2009, 2011, 2012, and several other years witnessed negative cash flow coverage ratios, demonstrating that the company paid out dividends even when its cash flow was negative or insufficient. This trend is concerning because it means HTLD had to rely on external finances or reserves to maintain its dividend payout, potentially exposing the company to financial strain. Therefore, over the long term, the company's ability to consistently cover dividends with free cash flow is unfavorable, posing risks to the sustainability and reliability of dividends for shareholders.

Stable Dividends Since the Company Began Paying Dividends?

Explain the criterion for Heartland Express (HTLD) and why it is important to consider

A stable dividend history over the past 20 years is a critical criterion for income-seeking investors relying on predictable cash flows. A company like Heartland Express, if it showcases consistency in its dividend payouts without substantial drops, demonstrates a reliable income stream and strong financial health.

Dividends Paid for Over 25 Years?

Dividends paid for over 25 years reflect a company's ability to generate steady profits. Consistency is crucial as it shows financial stability and commitment to returning value to shareholders.

Heartland Express (HTLD) has not paid dividends consistently over the last 25 years. From 1998 to 2002, there were no dividends paid, and it wasn't until 2003 that they began paying a nominal amount of $0.02 per share. Moreover, the dividend payments have been irregular, with significant jumps like the $2.08 per share in 2007 and the $1.08 per share in 2010 and 2012, which were anomalies and not part of a consistent trend. This inconsistency can be a concerning indicator for long-term investors seeking stable and predictable returns. Overall, Heartland Express has not demonstrated consistent dividend payments over 25 years, which is a negative trend for this criterion.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases indicate a company’s commitment to returning value to shareholders and can be a sign of confident cash flow management.

Over the past 20 years, from 2003 to 2023, Heartland Express (HTLD) has consistently repurchased shares in most years, including 2005 to 2022. The total number of shares decreased from approximately 100 million in 2003 to about 79 million in 2023, showing a clear trend of repurchase activity nearly every year. The average annual repurchased amount is around -1.1567 million shares, indicating a steady decrease in outstanding shares. While there were occasional years without repurchases, such as 2003, 2004, and 2014, the overall trend is positive. This consistency is good as it suggests HTLD’s stable cash flow and commitment to enhancing shareholder value by reducing share dilution.