Landstar System, Inc.'s (NASDAQ:LSTR) investors are due to receive a payment of $2.00 per share on 19th of January. This means the dividend yield will be fairly typical at 1.9%.

See our latest analysis for Landstar System

Landstar System's Earnings Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, Landstar System's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 19.1% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 38% by next year, which is in a pretty sustainable range.

Landstar System Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $0.28, compared to the most recent full-year payment of $3.32. This implies that the company grew its distributions at a yearly rate of about 28% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

We Could See Landstar System's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. Landstar System has impressed us by growing EPS at 6.6% per year over the past five years. Landstar System definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Landstar System Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Landstar System might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 12 Landstar System analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.