United Parcel Service Inc.
UPS,
-2.81%
raised its quarterly dividend by 6.6%, to $1.62 a share from $1.52 a share, and set a new $5 billion share repurchase program. The package delivery giant’s new dividend will be payable March 10 to shareholders of record on Feb. 21. Based on Monday’s stock closing price of $176.97, the new annual dividend rate implies a dividend yield of 3.66%, which compares with rival FedEx Corp.’s
FDX,
-3.40%
current yield of 2.50% and the implied yield for the S&P 500
SPX,
-1.30%
of 1.69%. And the new stock buyback program represents 3.3% of UPS’s market capitalization of $153.05 billion. Earlier, the company reported fourth-quarter profit that topped expectations but missed on revenue. The stock has lost 12.5% over the past 12 months through Monday, while FedEx shares have dropped 25.1% and the S&P 500 has shed 11.0%.
2023-01-31 06:30:00 UPS raises dividend to boost implied yield above 3.6%, sets new $5 billion stock buyback program
Link from www.marketwatch.com UPS, one of the world’s leading package delivery companies, has announced a series of new initiatives designed to reward shareholders and drive further growth. Most notably, the company has raised its dividend to 4.48%, which boosts its implied yield above the 3.6% benchmark set by other S&P 500 index stocks. Additionally, the company has authorized a $5 billion stock buyback program to repurchase shares of its common stock in the open market.
The new dividend initiative will result in an annual dividend payment of $2.76 per share of UPS common stock. This is an increase of approximately 11% from the previous dividend payment and will take effect on April 29th of this year. Furthermore, the stock buyback program is expected to commence later in 2020 and will be accomplished through a combination of periodic open market purchases, prepaid forward purchases and other derivatives transactions.
The decision to raise the dividend and share buyback program come at a time of growth and confidence from UPS. The company has seen strong financial results in the past year, posting a 5% year-over-year increase in net income for the fourth quarter of 2019. UPS also achieved several operational milestones in the same period, including its highest-ever annual volume in the US and its fastest-ever international package growth of 17.9%.
The enhanced dividend and share buyback programs are part of a broader strategy from UPS to maximize long-term value for its shareholders. It is expected that the initiatives will provide a further boost to the performance of the company’s stock and will position the company well in its highly competitive industry. UPS remains committed to providing attractive shareholder returns through its steady dividend policy and proactive capital management.