In a shareholder-friendly move, C.H. Robinson Worldwide (CHRW - Free Report) announced a hike in its dividend payout. The move is reflective of the company’s intention to utilize free cash for enhancing shareholders’ returns.
Notably, the company raised its quarterly dividend by 9% to 50 cents a share (or $2 annually) from 46 cents (or $1.84 annually). The new dividend, which has been approved by C.H. Robinson’s board of directors, will be paid on Dec 31, 2018 to its stockholders of record as on Dec 17. The dividend yield based on the new payout and its Dec 6 closing price is approximately 2.2%.
Apart from highlighting C.H. Robinson’s commitment to create value for its shareholders, this latest hiked dividend underscores its strong financial condition and bright prospects. Also, a look at the past records reveals this Minnesota-based company’s stable dividend payment history. This Zacks Rank #2 (Buy) company has been paying dividends for more than 25 years. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In a year’s time, shares of C.H. Robinson have gained 3% against the industry’s 10.7% decline. The dividend rise is likely to further boost the stock.
Furthermore, the current tax law (Tax Cuts and Jobs Act) is favorable for transportation companies as far as shareholder-friendly activities are concerned. With a low effective tax rate, companies are now left with huge savings to boost the free cash flow. This surge in free cash flow is enabling them to frequently engage in such shareholder-friendly activities.
Apart from C.H. Robinson, transportation stocks like Air Lease Corporation (AL - Free Report) , Norfolk Southern Corporation (NSC - Free Report) and Ryder System (R - Free Report) have hiked their respective quarterly dividends this year.
As investors prefer an income generating stock, a high dividend paying one is much coveted. Needless to say, investors are always on the lookout for companies that have a track record of consistent and incremental dividend payments.
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