Wall Street spent years dismissing UPS as a broken dividend story, but a fresh earnings beat changed the conversation. These four NYSE stocks now combine rising cash flow with long payout histories, and the weakest coverage ratio among them may…
For much of the past five years, Wall Street treated United Parcel Service (NYSE:UPS | UPS Price Prediction) as a broken dividend story. Then the package carrier posted its fourth consecutive top- and bottom-line beat and raised its full-year guidance. Three other income names also have fresh operating momentum: a pharma compounder, an oil major, and a monthly-paying REIT. All four trade on the NYSE, and each combines a dividend covered by cash flow with a long payout record. Below is how safe each payment looks and what it could mean for your income.
UPS: An Ultra-High Yield With Coverage Rebuilding
UPS pays a quarterly dividend of $1.64, or $6.56 per year. At a recent price of $105.05, that’s a forward yield of about 6.24%, putting UPS in ultra-high-yield territory.
Dividend safety: Management now expects full-year adjusted free cash flow of about $6.1 billion, against planned dividend payments of around $5.4 billion. Year-to-date free cash flow reached $4.2 billion even after one-time Driver Choice buyout payments, compared with $4.1 billion in dividends paid so far. UPS ended the quarter with $6.8 billion in cash and no outstanding commercial paper. The annual dividend equals about 90% of the $7.28 adjusted EPS guidance, which is a tight margin. Still, CFO Brian Dykes told analysts on the call, “So clearly our dividend is safe and secure.” UPS has paid a dividend every quarter on record back to 1999, and the quarterly rate rose from $0.17 in 2000 to its current level.
For the bull case, third-quarter adjusted EPS came in at $1.69, beating the $1.62 estimate, on revenue of $22.85 billion (up 6.7% year over year). The U.S. consumer slowdown could push credit losses higher.
Four Paychecks Built on Cash Flow
UPS has the biggest yield and the most to prove, with its coverage improving as transformation costs roll off, while AbbVie and Chevron pay less today but have the best coverage and the steadiest record of raises. Realty Income adds a monthly check backed by an A rating and a rising AFFO outlook. In all four cases, the latest results show more cash coming in to support the dividend.
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Lee Jackson has covered Wall Street analysts’ equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad, diverse career, including a stint as creative services director at an NBC affiliate in Austin, Texas, gives him unique insight into the financial industry.
Lee Jackson’s journey in the financial industry spans more than 30 years, including nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career spanned pivotal sell-side Wall Street events, from the dot-com rise and bubble to the Long-Term Capital Management debacle, 9/11, and the Great Recession of 2008. This reflects his resilience and adaptability amid market volatility.
Lee Jackson’s practical financial industry experience, gained through a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing across various platforms. This unique combination allows him to shed light on the intricacies of Wall Street in a way only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.
Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.
