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Lawrence Rothman, CFA, The Motley Fool
Sat, Apr 5, 2025, 6:33 AM 2 min read
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It's ever bully to person dividend payments, and it's peculiarly bully erstwhile markets are volatile, similar they are now.
United Parcel Service (NYSE: UPS) has paid a dividend for much than a 4th of a century. How galore shares would you person to ain to person $1,000 successful yearly payments?
UPS raised its quarterly payout by a penny, to $1.64 per share, earlier this year. The committee of directors has paid dividends since its 1999 initial nationalist offering and raised them annually since 2010.
Nonetheless, contempt this way record, it's imperative for investors to marque definite companies person the wherewithal to prolong dividends. Last year, UPS had escaped currency travel (FCF) of $6.2 cardinal compared to dividends of $5.4 billion. Management expects to nutrient FCF of $5.7 cardinal this twelvemonth portion paying retired $5.5 cardinal successful dividends.
The institution notes the value it places connected dividends. UPS presently has a cushion to prolong the payments, but that's expected to narrow. Hence, investors should support an oculus retired to cheque if that changes.
Turning to immoderate basal mathematics calculations, paying $1.64 per stock each 3 months works retired to an yearly dividend of $6.56 per share. To person $1,000, you would person to ain 153 shares.
The banal closed astatine $100.12 connected April 3. That means you would person to put astir $15,300, assuming dividends enactment constant. If the committee of directors continues to hike payments, you'll person higher dividend totals successful aboriginal years, and a chopped volition effect successful little payments.
UPS banal has an enticing 6.6% dividend yield, astir 5 times the S&P 500's 1.3%.
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