For 15 years, UPS has been delivering increasingly higher dividends to investors.
Logistics stalwart United Parcel Service (UPS 1.51%) is a name that investors follow closely thanks to the growth of e-commerce. Its allure, however, transcends its premier logistics company status as it has been steadily growing its robust dividend for 15 years — an encouraging sign for those looking to supplement their passive income streams.
But smart investors know that while the stock’s high-yield dividend — currently 4.7% — is enticing, it’s important to see if the hefty payout is jeopardizing the company’s financial well-being. With this in mind, let’s see how much UPS plans on paying out in dividends in 2024 to better evaluate the company’s financial health.
Big Brown delivers big dividends
While its history stretches back to 1907, UPS has a much more abbreviated history rewarding shareholders with a dividend, It started to make distributions in 1999. After occasional periods of maintaining the same dividend amount from year to year, UPS began a 15-year stretch — one that is still running — of making increasingly larger dividend payments.
UPS expects to pay a quarterly dividend of $1.63 through 2024. If it makes good on this outlook, UPS will return about $5.4 billion in dividends to shareholders in 2024. For some context, UPS returned $5.37 billion and $5.11 billion to shareholders in 2023 and 2022, respectively.
Currently, UPS stock offers investors a forward yield of 4.7%. Smart investors are often circumspect about high-yielding dividends such as this, since the appealing high payout may coincide with a company’s poor financial health. With a payout ratio that averages 84% over the past 10 years, it seems that the company isn’t sacrificing its financial well-being to make shareholders happy.
Should UPS stock be part and parcel of your portfolio?
For income investors, a business logistics leader like UPS is a great consideration right now — especially considering its price-to-operating cash flow multiple of 10.7. However, it’s important to recognize that further scrutiny is warranted before clicking the buy button, to make sure that UPS is a smart buy right now.
Scott Levine has no position in any of the stocks mentioned. The Motley Fool recommends United Parcel Service. The Motley Fool has a disclosure policy.