All It Takes Is $4,000 Invested in This High-Yield Dividend Stock to Generate $275 in Passive Income in 2026

• UPS overpromised and underdelivered for a 3rd consecutive year.

• Management believes that escaped currency travel volition proceed to improve, justifying aboriginal dividend increases.

• UPS’s valuation is truthful inexpensive that the institution lone has to nutrient mediocre results to perchance regain favour connected Wall Street.

• 10 stocks we similar amended than United Parcel Service ›

High-yield dividend stocks are an fantabulous means of participating successful the banal marketplace portion generating passive income. But adjacent the highest-yielding banal successful the S&P 500 -- LyondellBasell Industries (yielding 12.6%) -- couldn't support up with caller S&P 500 gains connected dividends alone. At the clip of this writing, the scale is up 16.6% twelvemonth to day aft gaining much than 20% successful some 2023 and 2024.

The champion crushed to bargain high-yield dividend stocks isn't to effort to bushed the indexes with dividends. Rather, it's to put successful coagulated companies astatine bully values that besides reward investors with dividends. A dividend is reliable lone if the institution paying it tin enactment the expense.

By investing $4,000 successful United Parcel Service (NYSE: UPS), investors tin expect to gain $275 successful yearly dividends, based connected its existent yield. Here's wherefore the worth banal is simply a bargain successful 2026.

UPS continues to disappoint investors, down astir 25% twelvemonth to day and up conscionable 15% from its 12-year low. Revenue and margins surged during the COVID-19 pandemic. Both metrics person been steadily declining for the past 3 years, successful lockstep with UPS's falling banal price.

Despite the challenges, UPS has remained committed to its dividend, which present yields a staggering 6.9% due to the fact that the banal has fallen truthful much. That's a tasty inducement for folks consenting to clasp the banal successful the hopes that UPS tin crook things around.

But it's a mistake to bargain a banal solely for the output -- arsenic evidenced by UPS' caller performance. Even factoring successful dividends, UPS investors person inactive mislaid 28.1% implicit the past 5 years, portion the S&P 500 would person doubled your wealth during that period.

As you tin spot successful the pursuing chart, UPS' dividend has accrued importantly successful caller years portion its net and escaped currency travel (FCF) person continued to slide.

Now, the dividend is somewhat larger than net and FCF, which is usually a reddish emblem that a dividend chopped could beryllium connected the way. However, UPS believes that its dividend is sustainable and could adjacent increase. UPS CFO Brian Dykes said the pursuing connected UPS' third-quarter fiscal 2025 net call:

We're seeing maturation successful the areas of the markets wherever we privation to turn that allows america to thrust amended returns and amended margins. With the outgo takeout and the web ratio that we're creating done our automation investment, we bash expect the concern to make importantly much escaped currency travel implicit time. Clearly we've got a dividend of astir $5.4 to $5.5 cardinal and we expect it to beryllium supra that successful the precise adjacent future.