Last update on 2024-06-27

JB Hunt Transport Services (JBHT) - Dividend Analysis (Final Score: 5/8)

Analyzing JB Hunt Transport Services (JBHT) dividend policy using an 8-criteria scoring system, revealing a strong but not perfect stability and growth.

Short Analysis - Dividend Score: 5

We're running JB Hunt Transport Services (JBHT) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

JB Hunt Transport Services (JBHT) was assessed on 8 criteria for its dividend policy and scored 5 out of 8. Here’s a breakdown: 1. **Dividend Yield**: JBHT's dividend yield is at 0.8411%, lower than the industry average of 2.27%. High returns are mostly from stock price appreciation. 2. **Dividend Growth**: The dividends have grown more than 5% annually over 20 years, suggesting stable growth. 3. **Payout Ratio**: JBHT maintains an average payout ratio of 21.16%, which is lower than the suggested cap of 65%, indicating stability and potential reinvestment in the business. 4. **Earnings Coverage**: JBHT has maintained an EPS higher than its dividend per share, showing good earnings coverage for its dividends. 5. **Cash Flow Coverage**: Ensuring dividends are well-covered by free cash flow shows good financial health but specific details were not provided. 6. **Dividend Stability**: Stable and consistently increasing dividends since 2004, although they haven't paid for 25 consecutive years. 7. **Dividend History**: Paid dividends consistently for the past 20 years, albeit not meeting the 25-year mark. 8. **Share Repurchases**: Consistent share buybacks over the 20 years show strong financial health and a commitment to returning value to shareholders.

Insights for Value Investors Seeking Stable Income

JBHT's dividend policy shows a mix of positive and some areas of lower performance. Despite a lower-than-average dividend yield, JBHT has consistently grown its dividends and maintained a low payout ratio, indicating potential for future growth and stability. The company has a strong record of covering dividends with earnings and cash flow, as well as a solid history of stock buybacks. For investors looking for steady dividend growth and long-term stability rather than high immediate income, JBHT could be worth considering.

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 JB Hunt Transport Services (JBHT) and why it is important to consider

Dividend yield (0.8411%) refers to the ratio of the company’s annual dividend compared to its share price. A higher yield generally indicates that the company is returning a sizeable amount of its earnings back to its shareholders and is considered an attractive feature for income-seeking investors. In JBHT's case, the 0.8411% dividend yield is lower than the industry average of 2.27%. Over the past 20 years, JBHT's dividend yield fluctuated, reaching a high of 1.54% in 2006 and a low of 0.2% in 2004. The average industry yield has also seen significant changes but was consistently higher than JBHT's yields. This trend reveals that JBHT might not be the best choice for investors primarily focused on high dividend income. It's essential to consider JBHT's stock price appreciation and other financial metrics when evaluating the investment’s overall returns.

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

Dividend Growth Rate shows how much a company's dividend payments have increased over the years, indicating financial health and shareholder value.

Analyzing the given data for JB Hunt Transport Services (JBHT), which includes the Dividend Per Share Ratio from 2003 to 2023, there are some years with substantial increases and decreases. Notably, 2005, 2008, 2012, and 2022 show significant positive ratios, while 2013 and 2014 reflect downturns. The average Dividend Ratio over 20 years is approximately 32.19%, which implies that, on average, the payouts have increased more than 5% annually. This is a positive indication of stable and potentially growing dividends for investors, reinforcing a good trend in dividend growth over a longer horizon despite fluctuations in individual years.

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

The average payout ratio represents the proportion of earnings a company pays to shareholders in the form of dividends. A ratio lower than 65% is considered healthy as it suggests ample retained earnings for growth and stability.

JB Hunt Transport Services (JBHT) has maintained an average payout ratio of 21.16% over the last 20 years. This is well below the 65% threshold, indicating a strong capability to retain earnings for reinvestment in the business and cushion against downturns. With the highest payout ratio in this period being 41.75% in 2009 and the lowest at 0% in 2003, this trend is very favorable. It shows that JBHT prioritizes sustainable growth and has a prudent approach towards its dividend policy, balancing shareholder returns with the need to invest in its operations. Such a conservative payout ratio bodes well for the company's long-term stability and potential for steadily increasing dividends.

Dividends Well Covered by Earnings?

Explain the criterion for JB Hunt Transport Services (JBHT) and why it is important to consider

Dividends are well covered by the earnings. This indicates how well a company's earnings can support its dividend payments. A higher percentage means better coverage and indicates a safer dividend. An Earnings Per Share (EPS) higher than the Dividend Per Share suggests that the company is generating enough profit to cover its dividend expenses without eating into its capital.

Dividends Well Covered by Cash Flow?

Understanding The Ratio Of Dividend Payout To Free Cash Flow

Free cash flow (FCF) is critical as it determines a company's ability to pay dividends, invest in new opportunities, and reduce debt. If dividends are consistently higher than FCF, it might indicate potential financial troubles as the company might be borrowing or using reserves to support dividend payments.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over the past 20 years indicates financial health and consistency in returning value to shareholders, crucial for income-seeking investors.

Examining JBHT's dividend per share over the past 20 years, we observe a consistent upward trajectory. The dividend per share has increased from $0 in 2003 to $1.68 in 2023. Importantly, there has been no instance of a dividend drop by more than 20% year-over-year. There were minor fluctuations, such as from $0.71 in 2012 to $0.45 in 2013, but this does not meet the 20% drop criterion. Overall, the trend is very positive, indicating stability and reliability in dividend payments, which is highly beneficial for income-seeking investors.

Dividends Paid for Over 25 Years?

The criterion assesses whether JB Hunt Transport Services (JBHT) has been consistent in paying dividends over a span of 25 years. Consistency in dividend payment is often seen as a mark of financial stability and the company's commitment to returning value to its shareholders.

An examination of the data from the past 25 years (1998-2023) shows that JB Hunt Transport Services has paid consistent dividends starting from the year 2004. Before that period, there have been instances where no dividends were paid particularly relative to the early 2000s and prior. This indicates a total tally of consistent dividend payments for 20 years, starting from 2004 up to 2023. JBHT started paying larger dividends over the years beginning from $0.045 per share in 2004 and escalating to $1.68 per share in 2023. Despite a few sporadic non-payment years in its further past, the upward trend in the amounts being consistently paid presents a reliable picture of gradually increasing profitability and shareholder value. Comparatively, the trend is positive as it reflects persistent growth over time even though it doesn't meet the exact 25-year criterion rigidly, it highlights considerable maturity and stability in recent decades. This trend is indicative of good financial health and focus on long-term shareholder value which can be seen as positive by most investors.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases over a long period, like 20 years, indicate a company's sustained commitment to returning value to shareholders. This can also signify effective management decisions and confidence in future cash flows.

JBHT has consistently repurchased shares over the past 20 years, with only a few years of no repurchases. Significant reductions in shares occurred in years such as 2005, 2006, 2007, and 2018, which suggest an aggressive stance on buybacks during those periods. The average share reduction rate of -2.2255% indicates a positive trend towards decreasing share count, which is typically seen as beneficial for existing shareholders by increasing earnings per share (EPS) and demonstrating the company's dedication to rewarding its investors. This trend is good and indicates JBHT's strong financial health and commitment to returning value to its shareholders.