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UPS Dividend Inches Higher to 2.5% Forward Yield

United Parcel Service (UPS) is one of the world’s largest package delivery companies with over 540,000 employees and customers in more than 220 countries and territories.

The company generated 62% of its revenue from U.S. domestic packages, 19% from international packages, and 18% from supply chain and freight sources during the third quarter of 2020. Within U.S. domestic packages, the company generated 74% from ground, 16% from next-day air, and 10% from deferred services.

Strong Q4 Results Without Guidance

United Parcel Service revenue rose 21.1% to $24.9 billion, beating consensus estimates by $2.05 billion, as non-GAAP earnings hit $2.66 per share, beating consensus estimates by $0.52 per share. Adjusted operating income also rose 26% to $2.87 billion, which came in above consensus estimates of $2.26 billion.

Despite the strong results, JPMorgan noted the lack of a full-year guidance with partial near-term commentary as a cause for caution. Analyst Brian Ossenbeck believes that the caution is tied to U.S. domestic business-to-business activity, which was down 8% year-over-year during the third and fourth quarters.

The company raised its quarterly dividend by 1% to $1.02 per share, which represents a 2.5% forward yield. The dividend is payable on March 10, 2021 to shareholders on record as of February 22, 2021.

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