Landstar System, Inc. (NASDAQ:LSTR) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Landstar System's shares before the 18th of February to receive the dividend, which will be paid on the 11th of March.

The company's upcoming dividend is US$0.36 a share, following on from the last 12 months, when the company distributed a total of US$3.44 per share to shareholders. Based on the last year's worth of payments, Landstar System has a trailing yield of 2.2% on the current stock price of US$159.79. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Landstar System can afford its dividend, and if the dividend could grow.

View our latest analysis for Landstar System

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Landstar System paid out a comfortable 25% of its profit last year.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. That explains why we're not overly excited about Landstar System's flat earnings over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Landstar System has delivered an average of 29% per year annual increase in its dividend, based on the past 10 years of dividend payments.

Final Takeaway

Should investors buy Landstar System for the upcoming dividend? Landstar System's earnings per share have not grown at all in recent years, although we like that it is paying out a low percentage of its earnings. Overall, Landstar System looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

Curious what other investors think of Landstar System? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are 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.