Logistics stalwart United Parcel Service (UPS +1.43%) is a name that investors follow closely thanks to the growth of e-commerce. Its allure, however, transcends its premier logistics company status as it has been steadily growing its robust dividend for 15 years -- an encouraging sign for those looking to supplement their passive income streams.
But smart investors know that while the stock's high-yield dividend -- currently 4.7% -- is enticing, it's important to see if the hefty payout is jeopardizing the company's financial well-being. With this in mind, let's see how much UPS plans on paying out in dividends in 2024 to better evaluate the company's financial health.
NYSE: UPS
Key Data Points
Big Brown delivers big dividends
While its history stretches back to 1907, UPS has a much more abbreviated history rewarding shareholders with a dividend, It started to make distributions in 1999. After occasional periods of maintaining the same dividend amount from year to year, UPS began a 15-year stretch -- one that is still running -- of making increasingly larger dividend payments.
UPS expects to pay a quarterly dividend of $1.63 through 2024. If it makes good on this outlook, UPS will return about $5.4 billion in dividends to shareholders in 2024. For some context, UPS returned $5.37 billion and $5.11 billion to shareholders in 2023 and 2022, respectively.
Currently, UPS stock offers investors a forward yield of 4.7%. Smart investors are often circumspect about high-yielding dividends such as this, since the appealing high payout may coincide with a company's poor financial health. With a payout ratio that averages 84% over the past 10 years, it seems that the company isn't sacrificing its financial well-being to make shareholders happy.
Should UPS stock be part and parcel of your portfolio?
For income investors, a business logistics leader like UPS is a great consideration right now -- especially considering its price-to-operating cash flow multiple of 10.7. However, it's important to recognize that further scrutiny is warranted before clicking the buy button, to make sure that UPS is a smart buy right now.
