15 Dividend Growth Stocks with the Highest Growth Rates

6. Old Dominion Freight Line, Inc. (NASDAQ:ODFL)

5-Year Average Dividend Growth Rate: 30.00%

On January 13, Evercore ISI analyst Jonathan Chappell raised his price target on Old Dominion Freight Line, Inc. (NASDAQ:ODFL) to $150 from $139, while keeping an In Line rating on the stock. He said that a lot of the optimism around EPS growth over the next two years is already reflected in transport valuations, especially after the sector benefited from heavy rotation and early-cycle excitement. At the same time, he warned that if demand weakens further, it could delay a true recovery and put added pressure on earnings forecasts. In that kind of setup, stocks can also see valuation multiples compress.

That caution lines up with what the numbers have been showing. Old Dominion shares are down more than 7% over the last 12 months as freight demand has stayed soft and the company’s model has been working against it. In the third quarter, revenue fell 4.3% year-over-year to $1.41 billion. Operating income dropped 10.2% to around $361 million, and EPS declined 10.5% to $1.28.The main drag was the weaker shipment volume. Less-than-truckload (LTL) tons per day dropped 9% versus last year, driven by a 7.9% decline in shipments per day and a 1.2% decline in weight per shipment. Put simply, customers were shipping fewer loads, and those shipments were slightly lighter than before.

Still, pricing has been a bright spot. The company said LTL revenue per hundredweight (excluding fuel) increased 4.7% year-over-year. Since a “hundredweight” is just 100 pounds, this metric is basically showing that Old Dominion is earning more per unit of freight even as volumes soften. In other words, it is moving less freight, but getting paid better for what it does move.

Management credits pricing power to service quality. On the Q3 earnings call, CEO Marty Freeman pointed to a 99% on-time performance rate and a cargo claims ratio of only 0.1%, which signals very low freight damage. With consistency like that, many customers are willing to pay up for reliability.

Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is a leading less-than-truckload carrier, providing regional and national LTL shipping services through a single integrated, non-union network.