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UPS vs. CPA: Which Dividend-Paying Transportation Stock to Bet on Now?
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Key Takeaways
CPA nearly doubled its quarterly dividend last year, while UPS has made only a marginal increase in 2025.
UPS' high payout ratio and falling free cash flow raise doubts about its long-term dividend sustainability.
CPA's 2025 EPS is expected to rise 14.3% YOY, with estimates trending upward, unlike declining trends for UPS.
United Parcel Service (UPS - Free Report) and Copa Holdings (CPA - Free Report) are two prominent names in the Zacks Transportation sector. Both companies focus on paying dividends to their shareholders, despite prevailing economic uncertainties, reflecting their shareholder-friendly approach.
Dividend-paying stocks offer a stable income stream and are less likely to experience significant price fluctuations. Dividend stocks are safe bets for creating wealth, as the payouts generally act as a hedge against economic uncertainty, like the current scenario.
Copa Holdings, a Latin American carrier, has an impressive record in terms of paying dividends. Last year, Copa Holdings almost doubled its quarterly dividend payout to $1.61 per share (annualized: 6.44 per share) from 82 cents per share (annualized: $3.28 per share).
UPS’ board approved a small dividend hike in February this year, thereby raising its quarterly cash dividend to $1.64 per share ($6.56 annualized) from $1.63 ($6.52 annualized).
Sustainability of UPS’ Dividends in Question Unlike CPA
No doubt UPS’ most recent dividend hike reflects its shareholder-friendly approach, but questions about the sustainability of its dividends arise. United Parcel Service’s elevated dividend payout ratio (the percentage of net income paid out as dividends) highlights the concerns associated with its ability to maintain dividend payouts over the long term.
We remind investors that in the early 2020s, when UPS’ business was flourishing, driven by exponential e-commerce growth during the peak pandemic period, the company made huge dividend payments. Free cash flow has been on a decline since then, touching a high of $9 billion in 2022.
Currently, UPS' elevated dividend payout is hurting its operational flexibility, with free cash flow barely covering the dividend. At 2024-end, free cash flow was $6.3 billion, not much above its dividend payments of $5.4 billion. United Parcel Service expects to generate free cash flow of around $5.7 billion in 2025. Dividend payments are expected to be roughly $5.5 billion. On the other hand, CPA’s much lower payout ratio indicates that it can maintain dividend payments over the long term.
While we have considered the dividend-paying abilities of both the transportation stocks, let's delve deeper to compare other relevant metrics to determine whether CPA or UPS is a better investment now.
Price Performance of CPA and UPS
CPA has navigated the recent tariff-induced stock market volatility well, registering an 18.1% year-to-date gain, while UPS stock has performed miserably in 2025 so far, declining in double digits.
YTD Price Comparison
Image Source: Zacks Investment Research
UPS’ lackluster price performance is mainly due to its revenue weakness as geopolitical uncertainty and high inflation continue to hurt consumer sentiment and growth expectations. The weak demand scenario has resulted in a decline in the volume of packages shipped.
On the other hand, CPA’s recent strength is driven by the impressive air-travel demand scenario. Despite uncertainties and currency-related headwinds, traffic growth has remained intact at Copa Holdings. With passenger volumes likely to remain strong, we anticipate passenger revenues to increase 4% in 2025 on a year-over-year basis.
Factors like regional economic expansion, better adaptation to market trends and focus on innovative strategies have helped Copa Holdings sustain operating margins of more than 20%, making it one of the most profitable airlines globally. Management expects the carrier to end 2025 with an adjusted operating margin in the 21-23% range. Our expectation of 22.8% is at the higher end of the company’s guided range.
How Do Zacks Estimates Compare for CPA & UPS?
The Zacks Consensus Estimate for CPA’s 2025 and 2026 sales implies a year-over-year increase of 4.5% and 8.1%, respectively. The consensus mark for CPA’s 2025 EPS suggests a 14.3% year-over-year rise. The 2026 EPS consensus mark indicates a 7.5% year-over-year increase. Moreover, the EPS estimates for 2025 and 2026 have been trending northward over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for UPS’ 2025 sales estimate implies a 4.1% year-over-year decrease, while the same for 2026 implies a 0.9% year-over-year increase. The consensus mark for UPS’ 2025 EPS indicates an 8.3% year-over-year decrease. The same for 2026 implies a 13.8% year-over-year increase. The EPS estimates for 2025 and 2026 have been trending southward over the past 60 days, unlike CPA.
Image Source: Zacks Investment Research
UPS Appears to Be Pricier Than CPA
CPA is trading at a forward earnings multiple of 6.03 and has a Value Score of A. Meanwhile, UPS has a Value Score of B, with its forward earnings multiple at 13.28.
Image Source: Zacks Investment Research
Conclusion
Agreed that both stocks focus on paying dividends but CPA’s lower dividend payout ratio puts to rest concerns about dividend sustainability, unlike UPS. CPA’s better price performance, valuation picture, and northward earnings estimate revisions highlight the fact that upbeat air travel demand is serving it well.
Given its prospects, CPA seems a better pick than UPS now.
While CPA sports a Zacks Rank #1 (Strong Buy), UPS is currently #3 Ranked (Hold).
Image: Bigstock
UPS vs. CPA: Which Dividend-Paying Transportation Stock to Bet on Now?
Key Takeaways
United Parcel Service (UPS - Free Report) and Copa Holdings (CPA - Free Report) are two prominent names in the Zacks Transportation sector. Both companies focus on paying dividends to their shareholders, despite prevailing economic uncertainties, reflecting their shareholder-friendly approach.
Dividend-paying stocks offer a stable income stream and are less likely to experience significant price fluctuations. Dividend stocks are safe bets for creating wealth, as the payouts generally act as a hedge against economic uncertainty, like the current scenario.
Copa Holdings, a Latin American carrier, has an impressive record in terms of paying dividends. Last year, Copa Holdings almost doubled its quarterly dividend payout to $1.61 per share (annualized: 6.44 per share) from 82 cents per share (annualized: $3.28 per share).
Copa Holdings Dividend Yield (TTM)
Copa Holdings, S.A. dividend-yield-ttm | Copa Holdings, S.A. Quote
UPS’ board approved a small dividend hike in February this year, thereby raising its quarterly cash dividend to $1.64 per share ($6.56 annualized) from $1.63 ($6.52 annualized).
United Parcel Service Dividend Yield (TTM)
United Parcel Service, Inc. dividend-yield-ttm | United Parcel Service, Inc. Quote
Sustainability of UPS’ Dividends in Question Unlike CPA
No doubt UPS’ most recent dividend hike reflects its shareholder-friendly approach, but questions about the sustainability of its dividends arise. United Parcel Service’s elevated dividend payout ratio (the percentage of net income paid out as dividends) highlights the concerns associated with its ability to maintain dividend payouts over the long term.
We remind investors that in the early 2020s, when UPS’ business was flourishing, driven by exponential e-commerce growth during the peak pandemic period, the company made huge dividend payments. Free cash flow has been on a decline since then, touching a high of $9 billion in 2022.
Currently, UPS' elevated dividend payout is hurting its operational flexibility, with free cash flow barely covering the dividend. At 2024-end, free cash flow was $6.3 billion, not much above its dividend payments of $5.4 billion. United Parcel Service expects to generate free cash flow of around $5.7 billion in 2025. Dividend payments are expected to be roughly $5.5 billion. On the other hand, CPA’s much lower payout ratio indicates that it can maintain dividend payments over the long term.
While we have considered the dividend-paying abilities of both the transportation stocks, let's delve deeper to compare other relevant metrics to determine whether CPA or UPS is a better investment now.
Price Performance of CPA and UPS
CPA has navigated the recent tariff-induced stock market volatility well, registering an 18.1% year-to-date gain, while UPS stock has performed miserably in 2025 so far, declining in double digits.
YTD Price Comparison
Image Source: Zacks Investment Research
UPS’ lackluster price performance is mainly due to its revenue weakness as geopolitical uncertainty and high inflation continue to hurt consumer sentiment and growth expectations. The weak demand scenario has resulted in a decline in the volume of packages shipped.
On the other hand, CPA’s recent strength is driven by the impressive air-travel demand scenario. Despite uncertainties and currency-related headwinds, traffic growth has remained intact at Copa Holdings. With passenger volumes likely to remain strong, we anticipate passenger revenues to increase 4% in 2025 on a year-over-year basis.
Factors like regional economic expansion, better adaptation to market trends and focus on innovative strategies have helped Copa Holdings sustain operating margins of more than 20%, making it one of the most profitable airlines globally. Management expects the carrier to end 2025 with an adjusted operating margin in the 21-23% range. Our expectation of 22.8% is at the higher end of the company’s guided range.
How Do Zacks Estimates Compare for CPA & UPS?
The Zacks Consensus Estimate for CPA’s 2025 and 2026 sales implies a year-over-year increase of 4.5% and 8.1%, respectively. The consensus mark for CPA’s 2025 EPS suggests a 14.3% year-over-year rise. The 2026 EPS consensus mark indicates a 7.5% year-over-year increase. Moreover, the EPS estimates for 2025 and 2026 have been trending northward over the past 60 days.
The Zacks Consensus Estimate for UPS’ 2025 sales estimate implies a 4.1% year-over-year decrease, while the same for 2026 implies a 0.9% year-over-year increase. The consensus mark for UPS’ 2025 EPS indicates an 8.3% year-over-year decrease. The same for 2026 implies a 13.8% year-over-year increase. The EPS estimates for 2025 and 2026 have been trending southward over the past 60 days, unlike CPA.
UPS Appears to Be Pricier Than CPA
CPA is trading at a forward earnings multiple of 6.03 and has a Value Score of A. Meanwhile, UPS has a Value Score of B, with its forward earnings multiple at 13.28.
Conclusion
Agreed that both stocks focus on paying dividends but CPA’s lower dividend payout ratio puts to rest concerns about dividend sustainability, unlike UPS. CPA’s better price performance, valuation picture, and northward earnings estimate revisions highlight the fact that upbeat air travel demand is serving it well.
Given its prospects, CPA seems a better pick than UPS now.
While CPA sports a Zacks Rank #1 (Strong Buy), UPS is currently #3 Ranked (Hold).
You can see the complete list of today’s Zacks #1 Rank stocks here.