Friday, December 4, 2015

Will United Parcel Service, Inc. Ship More Dividends Your Way?


If I own a company that makes a product for consumers, there's a few options as to how I can get those goods into the consumers' hands. I can build out smaller, local factories and rely on local shipping methods, although that would lead to a decrease in efficiency due to smaller scale plants and profitability due to needing more employees. I can also build fewer larger factories that would improve efficiency and profitability but would require me to build out a distribution network, which would be time consuming and expensive. Or I could contract with one of the best logistics companies in the world to deal with the shipping and likely save money over the long run.

The company I'm talking about is United Parcel Service (NYSE:UPS), a leader in getting goods to where they need to be on time. United Parcel Service currently has a 6-year dividend growth streak after keeping the dividend steady during the Great Recession. However, the dividend has not been decreased since being initiated in 1999.

Every $1 invested in United Parcel Service 20 years ago is worth $2.20 today, which is just a 5.1% annualized return. The lackluster returns are largely due to the lofty valuations that reduced the operational growth of the company. Shares of United Parcel Service currently offer an initial yield of 2.82%.

Continue reading the United Parcel Service Valuation Analysis on Seeking Alpha.

To view more of my analyses check out my Stock Analysis page or in the following Google Sheet.




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