Last update on 2024-06-27

Marten Transport (MRTN) - Dividend Analysis (Final Score: 5/8)

Analyze Marten Transport's (MRTN) dividend stability and performance using an 8-criteria scoring system. Current score: 5/8.

Short Analysis - Dividend Score: 5

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

Marten Transport (MRTN) has shown some strong points in its dividend policy but also has areas of concern. The dividend yield is significantly higher than the industry average, indicating that investors get good returns. However, the annual growth rate of dividends is inconsistent, despite a high average. The payout ratio is low, showing financial prudence, but the cash flow coverage for dividends is not stable. The company has paid stable dividends since they started in 2011, but they haven't been doing it for 25 years yet. Finally, Marten has shown some commitment to stock repurchases but isn't consistent every year.

Insights for Value Investors Seeking Stable Income

Marten Transport (MRTN) has both strengths and weaknesses in its dividend policy. While the high dividend yield and conservative payout ratio are attractive, the inconsistent growth and cash flow coverage might be concerning for some investors. If you are looking for a company with a high dividend yield and can tolerate some volatility in growth and coverage, MRTN could be worth considering. However, if long-term consistency and stability are your priority, 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?

Significant in assessing how much cash investors are getting back for each dollar invested in an equity position.

Marten Transport's dividend yield of 1.1439% is significantly higher than the industry average of 0.67%. This trend reveals that Marten Transport has been able to consistently offer returns that outpace its peers. Particularly notable is the spike in 2012, where the yield went up to 4.595%, and the subsequent years of strong yields generally exceeding 1%. These higher-than-average dividend yields point towards robust dividend policies and possibly strong earnings stability.

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

Dividend growth rates of over 5% annually are often indicative of a strong and growing company. Evaluating the dividend growth rate over a long period, like 20 years, helps to assess the company's stability and ability to increase shareholder value consistently.

Marten Transport (MRTN) has shown a highly variable dividend per share ratio over the past 20 years, with figures ranging from 0% in multiple years to an extraordinarily high 956.848% in 2012. The overall average dividend ratio is calculated to be 80.21%. While this figure is substantially higher than the 5% benchmark, the volatility and significant negative values observed in certain years (e.g., -85.2046% in 2013 and -63.6364% in 2022) indicate an inconsistent strategy in dividend payout. Generally, a high average might indicate good performance, but the inconsistent payout could pose concerns for long-term investors seeking stable and predictable dividend growth.

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

Average payout ratio is a measure of how much of a company's earnings are paid out as dividends. It’s important because it indicates sustainability.

Based on the provided data, Marten Transport (MRTN) has an average payout ratio of 18.58% over the last 20 years, which is significantly lower than the threshold of 65%. This suggests that the company has been very conservative in returning earnings to shareholders, likely retaining more earnings for reinvestment. Though there have been anomalies in 2012, 2019, and 2020 where the payout ratio spiked to 68.64%, 68.88%, and 76.79% respectively, these years seem to be outliers rather than the norm. Overall, this trend is positive as it indicates the company's dividends are sustainable and are not excessively eating into earnings, suggesting financial prudence and stability.

Dividends Well Covered by Earnings?

The evaluation of whether dividends are well covered by the earnings involves comparing the Earnings Per Share (EPS) to the Dividend Per Share (DPS). A higher EPS relative to DPS indicates that a company is more likely to sustain or increase its dividend payouts.

Over the years, Marten Transport (MRTN) has shown a consistent capability to cover its dividends with earnings. In the earlier years, from 2003 to 2010, the company either did not pay dividends or had minimal payouts which were well-covered by EPS when they did occur. Starting from 2012 to 2023, there has been a gradual increase in both EPS and DPS, but EPS has predominantly remained higher than DPS, demonstrating strong coverage. For instance, in 2017, the EPS was 1.0973, while the DPS was just 0.0533, yielding a coverage ratio of about 4.857%. Similarly, recent years like 2021 and 2022 have shown coverage ratios of 64.03% and 17.77% respectively. Such trends indicate that MRTN generally maintains a sound balance between earnings and dividend payouts, which is favorable for the company's financial health and sustainability in dividend payments.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow is crucial because it ensures that the company’s dividend payments are sustainable and not at risk. Free cash flow should ideally cover the dividend payouts.

Examining Marten Transport (MRTN) shows a highly fluctuating trend in free cash flow from 2003 to 2023. In years like 2019 and 2021, MRTN had a positive dividend coverage of 0.2748 and 3.1649 respectively, implying sufficient cash flow to cover dividends. However, the trend largely indicates negative coverage in most years including recent years like 2023 with -0.256, suggesting insufficient cash flow. These results hint that dividend payouts have often been strained, posing potential risks to future dividend sustainability.

Stable Dividends Since the Company Began Paying Dividends?

Explain the criterion for Marten Transport (MRTN) and why it is important to consider

Dividend stability refers to a company's ability to consistently pay and, ideally, increase its dividend payments to shareholders. For income-focused investors, such stable dividends become a critical component of their investment return, offering a predictable income stream and a signal of business health. Evaluating Marten Transport's dividend payout over the past 20 years reveals that they started issuing dividends from 2010. However, they experienced fluctuations, especially in the recent past, with notable peaks in 2019 and 2020, followed by a sharp drop to 0.24 in 2022 and 2023. Importantly, the critical bar of a 20% drop in dividends was not breached over this tenure, reassuringly passing this criterion.

Dividends Paid for Over 25 Years?

Analyzing a company's track record of paying dividends for over 25 years helps determine its consistency and reliability in returning value to shareholders.

Based on the provided data, Marten Transport (MRTN) has been paying dividends only since 2011. This means that the company does not meet the criterion of paying dividends for over 25 years. The dividends per share began at $0.0107 in 2011 and have shown a significant upward trend over the years, peaking at $0.66 in 2021 but then decreasing to $0.24 in 2022 and stabilizing. Although this upward trend signals the company's growing ability to return value to shareholders, it does not fulfill the specified long-term criterion. This trend should be viewed positively in terms of recent performance, but it lacks the long historical payout consistency desired by long-term dividend investors.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Marten Transport (MRTN) and why it is important to consider

The number of shares outstanding reflects whether a company is pursuing stock repurchases, which can indicate confidence in its financial health and a commitment to returning value to shareholders. In the past 20 years, Marten Transport (MRTN) has shown a varied approach to stock repurchases. The company repurchased shares in six out of the last twenty years (2006, 2009, 2016, 2019, 2022, and 2023). While the loyalty to buybacks was not consistent annually, the overall average repurchase rate of 1.2306 times over twenty years is a modest commitment. The most recent years register some repurchases, suggesting a positive sentiment toward increasing shareholder value. Notably, repurchasing shares can reduce the number of shares outstanding and potentially increase the stock price as well as earnings per share, depending on the financial metric valuation. Therefore, this trend can be seen positively even if infrequent, as it underscores the company’s occasional commitment to shareholder returns.