YieldTransportation is one of those big themes that I love to invest in.

And there’s a lot of ways you can do it. Railroads. Delivery companies. Shipping companies.

But there’s also another great way to invest in transportation.

Logistics.

There’s a lot of stuff moving from here to there and back again. After all, all this stuff people consume – food, electronics, clothing, home goods – doesn’t go anywhere if it isn’t moved.

[ad#Google Adsense 336×280-IA]And while transportation companies get the hard work done, moving stuff from where it’s currently at to where it needs to be, logistics allow that hard work to occur in a manner that’s profitable, timely, and sensible.

Without the management of goods moving from one place to another, it would just be pure chaos.

And one of the largest logistics companies out there is on my radar as a potential opportunity.

C.H. Robinson Worldwide, Inc. (CHRW) is a global third party logistics company that provides freight transportation services and logistics solutions to companies in a variety of industries.

Logistics is one of those industries that doesn’t seem very exciting when you first hear about it, but then you look deeper into it and realize that there’s definitely investment material there.

In fact, some of the most boring investments have been my most profitable. The more boring, the better.

And how about the larger and more dominant, the better. CHRW is a worldwide company, with more than 230 offices spread across the Americas, Europe, and Asia. And they have contractual relationships with approximately 63,000 transportation companies.

So let’s take a look at their results to see what a global logistics company is capable of. Their fiscal year ends December 31.

Revenue increased from $4.342 billion in FY 2004 to $12.752 billion at the end of FY 2013. That’s a compound annual growth rate of 12.72%. Not too boring now, huh?

Earnings per share grew from $0.80 to $2.65 during this time frame, which is a CAGR of 14.23%. That’s mighty impressive, in my view. I certainly thought there was potential in logistics, but the growth is actually outstanding. Even better, it was almost all smooth and upward, save for just the most recent fiscal year.

S&P Capital IQ predicts EPS will grow at a compound annual rate of 12% over the next three years, which is roughly in line with their historical average.

Meanwhile, the company’s dividend growth streak is impressive in its own right.

The company has raised its dividend for the last 16 consecutive years, which is as long as the company has been public.

Over the last five years, CHRW has increased its dividend at an annual rate of 9.7%.

The stock yields 1.96% here on a payout ratio of 48.4%. So the yield’s a little low, but I anticipate the company is just getting started as far as dividend raises goes.

CaptureCHRW’s balance sheet appears to be conservatively managed.

The long-term debt/equity ratio stands at 0.53, but that appears to be that high only due to the company’s rather low common equity.

The interest coverage ratio is over 60, so the company is in excellent financial condition.

The company is very profitable, though net margin is a bit thinner than one might expect. Net margin has averaged 4.32% over the last five years. However, return on equity has averaged 36.31% over the same period, again probably related to the low common equity. It’s just not an asset-intensive business.

The world needs goods moved. It’s a global economy now, and items are being imported and exported across virtually every country every single day. And a global logistics company like CHRW is well-positioned to continue capitalizing on this long-term trend, in my view .

They’ve only been public for 16 years, but over that time frame they’ve delivered excellent results for shareholders. The top line and bottom line growth has been impressive, and the company has failed to grow earnings year-over-year only once in that entire history. Meanwhile, they’re managed conservatively and continue to aggressively grow the dividend. Not much to really dislike here.

Of course, there are risks to consider. Primarily, they’re exposed to the global economy. So any economic slowdowns across one or more countries could lead to a reduction in demand for goods, which could hurt CHRW’s bottom line. However, they did hold up incredibly and impressively well during the financial crisis.

Shares trade hands for a P/E ratio of 24.70 here. That’s a substantial premium to the market; however, it’s also relatively in line with CHRW’s own five-year P/E ratio average. So the company usually trades at a premium to the market, and that premium is mostly intact right now.

I valued shares using a dividend discount model analysis with a 10% discount rate and an 8% long-term growth rate. That growth rate comes in below the company’s historical growth rate for EPS and dividends over the last 10 years, and is also below the prediction for EPS growth moving forward. Furthermore, the low payout ratio gives the company a little leeway in regards to growing the dividend at a rather robust rate, possibly in excess of EPS. The DDM analysis gives me a fair value of $75.60 on shares, which means CHRW is currently more or less fairly valued.

scBottom line: C.H. Robinson Worldwide, Inc. (CHRW) is a global logistics company, well-positioned to continue capitalizing on the global economy’s need to transport goods from one place to another. They’ve increased their dividend annually for every year they’ve been public, and at an attractive rate. And the top line and bottom line growth is impressive. If you’re ready to move some dividends into your account, consider this logistics company for your portfolio.

— Jason Fieber, Dividend Mantra

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