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2 Dividend-Paying Air Freight & Cargo Stocks You May Count On
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The Zacks Transportation - Air Freight and Cargo industry continues to grapple with issues like supply-chain disruptions and higher fuel costs. These are likely to keep the bottom line of the companies in this industrial cohort under pressure.
Despite these challenges, the industry has gained 25.6% over the past six months, outperforming the S&P 500 Index’s 12.3% appreciation and 13% growth of the broader Zacks Transportation sector.
Image Source: Zacks Investment Research
We believe the buoyant e-commerce demand scenario is a huge positive for the industry participants. Even though economies have reopened, consumer demand for online shopping is high. High shipping rates should also drive revenues.
Given this backdrop, let’s focus on some air freight and cargo stocks — United Parcel Service, Inc. (UPS - Free Report) and FedEx Corporation (FDX - Free Report) — which have consistently announced dividend hikes, thus highlighting their pro-shareholder stance.
Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market and act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, they offer downside protection with their consistent increase in payouts.
Additionally, these companies have superior fundamentals. These include a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some value characteristics.
How to Pick Stocks With Solid Dividend Payouts?
In order to choose some of the best dividend stocks from the aforementioned industry, we have run the Zacks Stock Screener to identify stocks with a dividend yield in excess of 2% and a sustainable dividend payout ratio of less than 60%.
FedEx: Based in Memphis, TN, FedEx provides transportation, e-commerce, and business services in the United States and internationally. Currently, this Zacks Rank #2 (Buy) stock has a market capitalization of $56.93 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
On Apr 5, FDX’s board of directors approved a dividend hike of 10%, thereby raising its quarterly cash dividend from $1.15 ($4.60 annualized) per share to $1.26 ($5.04 annualized). The raised dividend is anticipated to be paid out on Jul 3, 2023, to shareholders of record at the close of business on Jun 12.
Prior to the dividend hike, FDX paid out a quarterly dividend of $1.15 ($4.60 annualized) per share, which gives it a 2.00% yield at the current stock price. This company’s payout ratio is 27% of its earnings at present. The five-year dividend growth rate is 12.72%. (Check FedEx’s dividend history here).
FedEx has been consistently making efforts to reward its shareholders through dividends and share buybacks, which are encouraging. During the first nine months of fiscal 2023, FedEx paid dividends worth $888 million (higher than $598 million in the first nine months of fiscal 2022). During fiscal 2022, FedEx paid dividends worth $793 million (higher than the $686 million dividend payout in fiscal 2021). Such shareholder-friendly moves indicate the company’s commitment to creating value for shareholders and underline its confidence in its business. These initiatives not only instill investors’ confidence but positively impact earnings per share.
United Parcel: Headquartered in Atlanta, GA, United Parcel provides transportation and delivery, distribution, contract logistics, ocean freight, airfreight, customs brokerage, and insurance services. Currently, this Zacks Rank #3 (Hold) stock has a market capitalization of $166.36 billion.
UPS pays out a quarterly dividend of $1.62 ($6.48 annualized) per share, which gives it a 3.42% yield at the current stock price. This company’s payout ratio is 47% of its earnings at present. The five-year dividend growth rate is 12.60%. (Check United Parcel’s dividend history here).
Concurrent with the fourth-quarter 2022 earnings release, UPS board of directors raised the quarterly cash dividend to $1.62 per share, effective from the first quarter of 2023. This marked the 14th consecutive year of a dividend increase. Additionally, UPS has approved a $5-billion share repurchase authorization, replacing the company’s existing authorization.
UPS’ strong free cash flow-generating ability supports its shareholder-friendly activities. In 2022, UPS generated a free cash flow of $9,038 million. Robust free cash flow generation is a major positive, leading to an uptick in shareholder-friendly activities. Notably, UPS paid dividends worth $5,114 million and repurchased shares worth $3,500 million in 2022. In 2023, UPS expects to make dividend payments of $5.4 billion and repurchase shares worth $3 billion.
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2 Dividend-Paying Air Freight & Cargo Stocks You May Count On
The Zacks Transportation - Air Freight and Cargo industry continues to grapple with issues like supply-chain disruptions and higher fuel costs. These are likely to keep the bottom line of the companies in this industrial cohort under pressure.
Despite these challenges, the industry has gained 25.6% over the past six months, outperforming the S&P 500 Index’s 12.3% appreciation and 13% growth of the broader Zacks Transportation sector.
Image Source: Zacks Investment Research
We believe the buoyant e-commerce demand scenario is a huge positive for the industry participants. Even though economies have reopened, consumer demand for online shopping is high. High shipping rates should also drive revenues.
Given this backdrop, let’s focus on some air freight and cargo stocks — United Parcel Service, Inc. (UPS - Free Report) and FedEx Corporation (FDX - Free Report) — which have consistently announced dividend hikes, thus highlighting their pro-shareholder stance.
Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market and act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, they offer downside protection with their consistent increase in payouts.
Additionally, these companies have superior fundamentals. These include a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some value characteristics.
How to Pick Stocks With Solid Dividend Payouts?
In order to choose some of the best dividend stocks from the aforementioned industry, we have run the Zacks Stock Screener to identify stocks with a dividend yield in excess of 2% and a sustainable dividend payout ratio of less than 60%.
FedEx: Based in Memphis, TN, FedEx provides transportation, e-commerce, and business services in the United States and internationally. Currently, this Zacks Rank #2 (Buy) stock has a market capitalization of $56.93 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
On Apr 5, FDX’s board of directors approved a dividend hike of 10%, thereby raising its quarterly cash dividend from $1.15 ($4.60 annualized) per share to $1.26 ($5.04 annualized). The raised dividend is anticipated to be paid out on Jul 3, 2023, to shareholders of record at the close of business on Jun 12.
Prior to the dividend hike, FDX paid out a quarterly dividend of $1.15 ($4.60 annualized) per share, which gives it a 2.00% yield at the current stock price. This company’s payout ratio is 27% of its earnings at present. The five-year dividend growth rate is 12.72%. (Check FedEx’s dividend history here).
FedEx Corporation Dividend Yield (TTM)
FedEx Corporation dividend-yield-ttm | FedEx Corporation Quote
FedEx has been consistently making efforts to reward its shareholders through dividends and share buybacks, which are encouraging. During the first nine months of fiscal 2023, FedEx paid dividends worth $888 million (higher than $598 million in the first nine months of fiscal 2022). During fiscal 2022, FedEx paid dividends worth $793 million (higher than the $686 million dividend payout in fiscal 2021). Such shareholder-friendly moves indicate the company’s commitment to creating value for shareholders and underline its confidence in its business. These initiatives not only instill investors’ confidence but positively impact earnings per share.
United Parcel: Headquartered in Atlanta, GA, United Parcel provides transportation and delivery, distribution, contract logistics, ocean freight, airfreight, customs brokerage, and insurance services. Currently, this Zacks Rank #3 (Hold) stock has a market capitalization of $166.36 billion.
UPS pays out a quarterly dividend of $1.62 ($6.48 annualized) per share, which gives it a 3.42% yield at the current stock price. This company’s payout ratio is 47% of its earnings at present. The five-year dividend growth rate is 12.60%. (Check United Parcel’s dividend history here).
Concurrent with the fourth-quarter 2022 earnings release, UPS board of directors raised the quarterly cash dividend to $1.62 per share, effective from the first quarter of 2023. This marked the 14th consecutive year of a dividend increase. Additionally, UPS has approved a $5-billion share repurchase authorization, replacing the company’s existing authorization.
United Parcel Service, Inc. Dividend Yield (TTM)
United Parcel Service, Inc. dividend-yield-ttm | United Parcel Service, Inc. Quote
UPS’ strong free cash flow-generating ability supports its shareholder-friendly activities. In 2022, UPS generated a free cash flow of $9,038 million. Robust free cash flow generation is a major positive, leading to an uptick in shareholder-friendly activities. Notably, UPS paid dividends worth $5,114 million and repurchased shares worth $3,500 million in 2022. In 2023, UPS expects to make dividend payments of $5.4 billion and repurchase shares worth $3 billion.