United Parcel Service’s UPS board approved a new share repurchase program worth $5 billion, replacing the existing $2.1-billion authorization. The move underscores the company’s sound financial position and its commitment to reward its shareholders.
Simultaneously, the company announced a quarterly dividend of $1.02 per share on all outstanding Class A and Class B shares. The amount is payable to shareholders on Sep 9, of record as of Aug 23.
UPS’ chief executive officer, Carol Tome, stated that the company expects to continue paying regular cash dividends and targets a dividend payout ratio of approximately 50% of its prior year’s adjusted net income, beginning in 2022.
United Parcel Service, Inc. Price
United Parcel Service, Inc. price | United Parcel Service, Inc. Quote
UPS’ solid free cash flow generation capacity supports its shareholder-friendly activities. Even in the coronavirus-ravaged 2020, the company generated free cash flow of $5.1 billion compared with more than $4.1 billion generated in 2019. In the first half of 2021, it generated free cash flow of $6.8 billion, up 74.7% year over year.
UPS has an impressive dividend payment history. In 2020, the company paid dividends worth $3.6 billion, up 5.2% year over year. Continuing its pro-shareholder stance, in February, UPS' board approved a 1% increase in its quarterly dividend to $1.02 per share. In first-half 2021, UPS paid dividends worth $1.7 billion.
Zacks Rank & Key Picks
UPS carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are Union Pacific Corporation UNP, ArcBest Corporation ARCB and Matson MATX. While Union Pacific carries a Zacks Rank #2 (Buy), ArcBest and Matson sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Shares of Union Pacific, ArcBest and Matson have rallied more than 15%, 100% and 74% in a year’s time respectively.
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