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UPS vs. CPA: Which Dividend-Paying Transportation Stock Holds an Edge?
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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 raises sustainability concerns as free cash flow remains tight.
CPA's strong air travel demand and margin outlook support superior price performance and growth.
United Parcel Service (UPS - Free Report) and Copa Holdings (CPA - Free Report) are well-known companies within the Zacks Transportation sector. Both continue to prioritize dividend payments to shareholders despite ongoing economic challenges, demonstrating their commitment to shareholder value.
Dividend-paying stocks provide a reliable and steady income source and typically exhibit lower price volatility. These stocks are considered a secure option for building wealth, as dividend payouts often serve as a buffer against economic instability, such as the current environment.
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) from 82 cents (annualized: $3.28).
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 the dividend 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, it made huge dividend payments. Free cash flow has been on a decline since 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 make dividend payments of around $5.5 billion in 2025. On the other hand, CPA’s much lower dividend payout ratio implies that concerns associated with its ability to maintain dividend payouts over the long term are absent.
While we have considered the dividend-paying abilities of both the transportation stocks, let us delve deep to compare other relevant metrics to determine which of UPS and CPA has stronger upside potential.
Price Performance of CPA and UPS
CPA has navigated the recent tariff-induced stock market volatility well, registering a 44.8% 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’ subdued stock performance is primarily attributed to revenue weakness, as ongoing geopolitical tensions and the still high inflation continue to weigh on consumer sentiment and dampen growth prospects. The soft demand environment has led to a reduction in shipping volumes.
In contrast, Copa Holdings’ strong performance is supported by robust air travel demand. Despite economic uncertainties and currency-related challenges, Copa Holdings has maintained steady traffic growth. With passenger volumes expected to stay elevated, we project a 4.1% year-over-year increase in passenger revenues for 2025.
Elements such as regional economic growth, effective adaptation to market trends and a focus on innovation have enabled Copa Holdings to maintain operating margins more than 20%, positioning it among the most profitable airlines globally. Management anticipates closing 2025 with an adjusted operating margin in the range of 21-23%. Our forecast of 22.5% is toward the upper end of this guidance.
How Does the Zacks Consensus Estimate Compare for CPA & UPS?
The Zacks Consensus Estimate for CPA’s 2025 and 2026 sales implies a year-over-year increase of 4.7% and 8.5%, respectively. The consensus mark for CPA’s 2025 EPS indicates a 13.5% year-over-year rise. The consensus mark for 2026 EPS indicates a 9.5% year-over-year increase. Moreover, the EPS estimate for 2026 has been trending northward over the past 60 days. The same for the current year has been revised marginally downward at the same time.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for UPS’ 2025 sales estimate implies a 4% year-over-year decrease, while the same for 2026 implies a 0.6% increase. The consensus mark for UPS’ 2025 EPS indicates a 16.3% year-over-year decrease. The same for 2026 implies a 13% year-over-year increase. The EPS estimates for 2025 and 2026 have been trending significantly southward over the past 60 days, unlike CPA.
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, favorable earnings estimate revisions highlight the fact that upbeat air travel demand is serving it well.
Given our analysis, CPA clearly emerges as the winner and has an edge over UPS now.
While CPA carries a Zacks Rank #3 (Hold), UPS currently has a Zacks Rank #4 (Sell).
Image: Bigstock
UPS vs. CPA: Which Dividend-Paying Transportation Stock Holds an Edge?
Key Takeaways
United Parcel Service (UPS - Free Report) and Copa Holdings (CPA - Free Report) are well-known companies within the Zacks Transportation sector. Both continue to prioritize dividend payments to shareholders despite ongoing economic challenges, demonstrating their commitment to shareholder value.
Dividend-paying stocks provide a reliable and steady income source and typically exhibit lower price volatility. These stocks are considered a secure option for building wealth, as dividend payouts often serve as a buffer against economic instability, such as the current environment.
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) from 82 cents (annualized: $3.28).
Copa Holdings Dividend Yield (TTM)
Copa Holdings dividend-yield-ttm | Copa Holdings 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 dividend-yield-ttm | United Parcel Service 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 the dividend 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, it made huge dividend payments. Free cash flow has been on a decline since 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 make dividend payments of around $5.5 billion in 2025. On the other hand, CPA’s much lower dividend payout ratio implies that concerns associated with its ability to maintain dividend payouts over the long term are absent.
While we have considered the dividend-paying abilities of both the transportation stocks, let us delve deep to compare other relevant metrics to determine which of UPS and CPA has stronger upside potential.
Price Performance of CPA and UPS
CPA has navigated the recent tariff-induced stock market volatility well, registering a 44.8% year-to-date gain, while UPS stock has performed miserably in 2025 so far, declining in double digits.
YTD Price Comparison
UPS’ subdued stock performance is primarily attributed to revenue weakness, as ongoing geopolitical tensions and the still high inflation continue to weigh on consumer sentiment and dampen growth prospects. The soft demand environment has led to a reduction in shipping volumes.
In contrast, Copa Holdings’ strong performance is supported by robust air travel demand. Despite economic uncertainties and currency-related challenges, Copa Holdings has maintained steady traffic growth. With passenger volumes expected to stay elevated, we project a 4.1% year-over-year increase in passenger revenues for 2025.
Elements such as regional economic growth, effective adaptation to market trends and a focus on innovation have enabled Copa Holdings to maintain operating margins more than 20%, positioning it among the most profitable airlines globally. Management anticipates closing 2025 with an adjusted operating margin in the range of 21-23%. Our forecast of 22.5% is toward the upper end of this guidance.
How Does the Zacks Consensus Estimate Compare for CPA & UPS?
The Zacks Consensus Estimate for CPA’s 2025 and 2026 sales implies a year-over-year increase of 4.7% and 8.5%, respectively. The consensus mark for CPA’s 2025 EPS indicates a 13.5% year-over-year rise. The consensus mark for 2026 EPS indicates a 9.5% year-over-year increase. Moreover, the EPS estimate for 2026 has been trending northward over the past 60 days. The same for the current year has been revised marginally downward at the same time.
The Zacks Consensus Estimate for UPS’ 2025 sales estimate implies a 4% year-over-year decrease, while the same for 2026 implies a 0.6% increase. The consensus mark for UPS’ 2025 EPS indicates a 16.3% year-over-year decrease. The same for 2026 implies a 13% year-over-year increase. The EPS estimates for 2025 and 2026 have been trending significantly southward over the past 60 days, unlike CPA.
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, favorable earnings estimate revisions highlight the fact that upbeat air travel demand is serving it well.
Given our analysis, CPA clearly emerges as the winner and has an edge over UPS now.
While CPA carries a Zacks Rank #3 (Hold), UPS currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.