Landstar vs. ArcBest: Which Trucking Stock Pays the Better Dividend Through a Freight Slump?

Landstar System (NASDAQ:LSTR | LSTR Price Prediction) and ArcBest (NASDAQ:ARCB) both reported strong third-quarter sales as freight finally recovers. Landstar’s revenue rose 25.4% to $1.511 billion. ArcBest grew 15.5% to $1.211 billion. For retirement investors, the more important question is which payout holds up if the slump returns.

Independent Truckers Power Landstar While Shared Trailers Carry ArcBest

Landstar owns few trucks. It routes freight through independent agents and owner-operators, so its costs fall when loads drop. Truck revenue rose 29% to $1.407 billion on roughly 25% higher revenue per load, suggesting pricing did most of the work. CEO Frank Lonegro called the 165 net owner-operator truck additions “the strongest quarterly improvement since the third quarter of 2021.”

ArcBest is mainly a less-than-truckload carrier. Its unionized ABF Freight network moves smaller loads from many customers on shared trucks, so terminals, equipment, and wages stay fixed during a downturn. ABF’s operating ratio improved 210 basis points to 90.4%, which means more of each revenue dollar now reaches profit. The brokerage side swung to $12.45 million in operating income after posting a loss a year earlier. CEO Seth Runser credited “disciplined execution, continued momentum in Asset-Light and ongoing savings.”

Landstar Shares Its Cash While ArcBest Holds On to It

Landstar’s dividend used about 31% of quarterly EPS. That is still a comfortable buffer after $55.3 million in insurance and claims costs weighed on the quarter. Add January’s $2 special, and trailing payouts reach $3.64 per share, a yield of roughly 2.5%. ArcBest has held its dividend at $0.12 since 2022. Management has put its cash into $26 million of buybacks and a restructuring targeting about $40 million in annual savings.

Insurance Claims and Winter Will Test Both Payouts

I’ll be watching Landstar’s claims line closely. EPS of $1.42 missed expectations of $1.66, largely because of reserve charges. Lonegro acknowledged Landstar is “not immune to the challenges of the insurance and claims inflation prevalent in our industry.” October loads running about 7% above last year should help offset that pressure.

ArcBest expects ABF’s operating ratio to worsen by 50 to 150 basis points in the fourth quarter. That would still beat the usual seasonal slide. It also posted net losses in the three quarters before this one, which helps explain why the dividend stays small.

Why Landstar Wins the Dividend Matchup for Me

Through a freight slump, Landstar’s payout looks better protected. Its variable-cost network, steady raises, annual special dividend, and lower debt give the payout several layers of protection. ArcBest’s appeal rests on its turnaround and its 2028 target of $12 to $15 in adjusted EPS. My view could change if ArcBest starts sharing those gains through a meaningful dividend increase. Until then, Landstar’s payout carries more layers of protection. For readers who want a longer list of dividend payers built to survive cycles like this one, we ranked ten of them in a free Dividend Kings report.

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