Is United Parcel Service Inc (NYSE:UPS) A Smart Choice For Dividend Investors?
United Parcel Service Inc (NYSE:UPS) has pleased shareholders over the past 10 years, paying out an average dividend of 3.0% annually. The company currently pays out a dividend yield of 3.0% to shareholders, making it a relatively attractive dividend stock. Should it have a place in your portfolio? Let’s take a look at United Parcel Service in more detail.
Check out our latest analysis for United Parcel Service
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it the top 25% annual dividend yield payer?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has the amount of dividend per share grown over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
How well does United Parcel Service fit our criteria?
The current trailing twelve-month payout ratio for the stock is 58.2%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 48.6%, leading to a dividend yield of around 3.2%. However, EPS should increase to $7.51, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of UPS it 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. This is an impressive feat, which makes UPS a true dividend rockstar.
Relative to peers, United Parcel Service produces a yield of 3.0%, which is high for Logistics stocks but still below the market’s top dividend payers.
Next Steps:
With this in mind, I definitely rank United Parcel Service as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three key factors you should further examine:
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.
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.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
