If you are an income investor, then United Parcel Service Inc (NYSE:UPS) should be on your radar. United Parcel Service, Inc., a package delivery company, provides transportation, logistics, and financial services in the United States and internationally. Over the past 10 years, the US$91.40B market cap company has been growing its dividend payments, from $1.8 to $3.64. Currently yielding 3.42%, let’s take a closer look at United Parcel Service’s dividend profile. View our latest analysis for United Parcel Service
What Is A Dividend Rock Star?
It is a stock that pays a stable and consistent dividend, having done so reliably for the past decade with the expectation of this continuing into the future. More specifically: Its annual yield is among the top 25% of dividend payers It consistently pays out dividend without missing a payment or significantly cutting payout Its has increased its dividend per share amount over the past It is able to pay the current rate of dividends from its earnings It is able to continue to payout at the current rate in the future
High Yield And Dependable
United Parcel Service currently yields 3.42%, which is high for Logistics stocks. But the real reason United Parcel Service stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. UPS has increased its DPS from $1.8 to $3.64 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. United Parcel Service has a trailing twelve-month payout ratio of 58.90%, which means that the dividend is covered by earnings. However, going forward, analysts expect UPS’s payout to fall to 47.29% of its earnings, which leads to a dividend yield of around 3.48%. However, EPS should increase to $7.25, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
Investors of United Parcel Service can continue to expect strong dividends from the stock. With its favorable dividend characteristics, if high income generation is still the goal for your portfolio, then United Parcel Service is one worth keeping around. However, given this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three important factors you should further research:
- 1. Future Outlook: What are well-informed industry analysts predicting for UPS’s future growth? Take a look at our free research report of analyst consensus for UPS’s outlook.
- 2. Valuation: What is UPS worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether UPS is currently mispriced by the market.
- 3. Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.