C.H. Robinson Raises Dividend

C.H. Robinson Worldwide Inc. (CHRW - Analyst Report) has recently increased its dividend to 33 cents per share, or $1.32 on an annualized basis. The company dividend was raised from 29 cents paid previously in the past quarters of 2011. The new dividend will be payable on January 3, 2012 to shareholders of record on December 20

C.H. Robinson has been paying regular dividends to its shareholders for more than twenty five years and continues to do with support from its strong balance sheet and liquidity position.

Given the company’s third party business model, which requires less investment on building capital assets, it manages to function on capital requirements leveraging its optimum cost structure in the current weaker consumer market. This has allowed the company to garner surplus cash to fund internal growth, acquisitions, share repurchases and dividend hikes.

Additionally, the present supply chain dynamics remain favorable for non-asset based logistics providers like C.H. Robinson as customers seek overall transportation services like truck, intermodal and air freight at lower prices. C.H. Robinson can cater to these customers by utilizing its pool of network carriers to procure lower transportation costs similar to its market rival Expeditors International of Washington Inc. (EXPD - Analyst Report).

In the near term, factors like network rationalization and a tightened truckload market are likely to propel pricing gains for the company. Additionally, C.H. Robinson is demonstrating efficient cost control measures.

However, increased headcounts raised employee compensation cost for the company during the last three quarters of the year. While the increase in crew capacity is essential to support business growth, it can offset by pricing and volume growth in the near term.

We are currently maintaining our long-term Neutral recommendation on C.H. Robinson supported by the Zacks #3 Rank (Hold).

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