If your holiday gifts made it under the Christmas tree just in time, there’s a good chance at least one was delivered by United Parcel Service (NYSE: UPS). As the world’s largest package delivery company, UPS handled an average of 22.3 million packages and documents per day in 2023.
On top of that, UPS currently offers an attractive forward dividend yield of 5.19%. Despite weathering some challenges, the company’s 15-year streak of consecutive dividend increases signals that payouts aren’t going away anytime soon.
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UPS targets a dividend payout ratio of approximately 50% of prior year adjusted earnings per share. During an earnings call earlier this year, CEO Carol Tomé reaffirmed the company’s commitment to dividends, stating: “We have no intent to cut the dividend to make that math work. We’re going to earn back into it.”
While nothing in investing is ever a sure bet, UPS’ track record offers some hints about what might be next for shareholders.
Dividend Increase Payable
Quarterly Dividend Raise
March 8, 2024
$1.63
March 10, 2023
$1.62
March 10, 2022
$1.52
March 10, 2021
$1.02
March 10, 2020
$1.01
March 12, 2019
$0.96
March 7, 2018
$0.91
March 8, 2017
$0.83
March 9, 2016
$0.78
March 10, 2015
$0.73
March 11, 2014
$0.67
Data source: UPS. Chart by author.
UPS has steadily raised its dividend, with recent increases being more modest. For 2025, the size of the raise will hinge on UPS’ financial performance and broader market conditions. A cautious estimate would bump the quarterly dividend to $1.64, bringing the annual payout to $6.56 per share. Or UPS could stick to its current payout of $1.63 per quarter, keeping the annual total at $6.52 per share in 2025.
Of course, surprises aren’t off the table. A stronger-than-expected holiday season or better financial results could deliver a bigger dividend boost. While the exact dividend payout for 2025 remains a question mark, one thing is clear: Management hopes to maintain the dividend and avoid any cuts.
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Charlene Rhinehart has no position in any of the stocks mentioned. The Motley Fool recommends United Parcel Service. The Motley Fool has a disclosure policy.
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