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UPS Enhances Shareholders' Returns With 5.5% Dividend Hike

Zacks Equity Research

In a shareholder-friendly measure, United Parcel Service, Inc. UPS recently announced a hike in its dividend payout. The move indicates the company’s sound financial position and its intention to utilize free cash for enhancing shareholders’ returns.

The company has raised its quarterly dividend by 5.5% to 96 cents per share ($3.84 annually). This new dividend, approved by the company’s board of directors, will be paid on Mar 12, 2019 to stockholders of record as of Feb 26. The dividend yield based on this latest payout and the Feb 15 closing market price is approximately 3.5%.

This Zacks Rank #3 (Hold) company has a consistent track record of increasing dividends. Apart from the latest hike, last February, the company upped its dividend by 10%. Additionally, the company is active on the buyback front. In 2018, it bought back 8.9 million shares for $1 billion. Also, it paid approximately $3.2 billion as dividend to shareholders in the same period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

United Parcel Service, Inc. Price

 

United Parcel Service, Inc. Price | United Parcel Service, Inc. Quote


In the wake of the Tax Cuts and Jobs Act of 2017, dividend hikes have become a common phenomenon in the Transportation sector. Notable players like Union Pacific Corporation UNP, GATX Corporation GATX and Alaska Air Group ALK have also rewarded shareholders with dividend hikes. The reduced tax rates from the current law lead to huge tax savings, which in turn, boost cash flow. With a solid cash flow, companies are frequently engaging in shareholder-friendly activities among other things.

As investors prefer an income-generating stock, a high dividend-yielding one is much coveted. Needless to say that investors are always on the lookout for companies, which boast an impressive history of regular and incremental dividend payments.

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