Is United Parcel Service (UPS) the Best Dividend Growth Stock with High Yields?
We recently published a list of the . In this article, we are going to take a look at where United Parcel Service, Inc. (NYSE:UPS) stands against other best dividend growth stocks.
Dividend-paying stocks have been gaining popularity among investors due to their long-term advantages. According to Jeremy Zirin, who leads the US equity team for private clients at UBS Asset Management, companies with a consistent track record of increasing dividends are a smart choice for investors seeking a balanced approach in the current market environment. When markets dipped in April after President Donald Trump announced new tariff policies, investors gravitated toward high-yield dividend stocks. However, as trade tensions began to ease and negotiations progressed, markets recovered. Stocks surged particularly after the US and China agreed to temporarily reduce tariffs. He made the following comment about dividend stocks:
'The higher-dividend-yielding strategies tend to do better when markets are in real turmoil and declining, but if there's more chop, more volatility and potentially upside … you don't want to be overly defensive.'
Historically, companies that consistently increase their dividends have tended to be less volatile and often delivered stronger returns than the broader market, including benchmarks like the S&P Equal Weight Index. According to a report by Guggenheim, from May 2005 through December 2024, firms that either initiated or raised their dividends generated an average annual return of 10.5%. In contrast, companies that cut or suspended their payouts posted just 5.5% annually. The overall market returned 10.4% during this timeframe, slightly behind the dividend growers. The report also highlighted that dividend growth strategies have historically performed well in both rising and falling markets, making them an attractive option for investors focused on long-term gains and downside protection.
According to a report by S&P Global, the growth of global dividend payments had been slowing since the post-COVID recovery, but that trend reversed last year. In 2024, the growth rate unexpectedly accelerated to 8%, with shareholders receiving approximately $180 billion more than the previous year. This increase came as a surprise given the persistent geopolitical and economic challenges. The report also highlighted that several sectors and regions saw record dividend initiations, including the US technology, media, and telecom (TMT) sector, banks in Italy and Spain, Japan's automotive industry, and a general rise in payouts from Mainland China. Even with extreme price fluctuations, dividend payments from the oil and gas sector remained strong. Looking ahead, the report suggested that this high level of dividends is likely to hold steady, with global payouts expected to remain at $2.3 trillion in 2025.
With growing investor appetite for dividend-paying stocks, many companies have responded by gradually increasing their dividend payouts. A report by Janus Henderson revealed that global dividend payments reached a record $1.75 trillion in 2024, reflecting a 6.6% rise on an underlying basis. The overall growth rate came in at 5.2%, slightly held back by a drop in special one-time dividends and the effect of a stronger U.S. dollar. Out of the 49 countries covered in the report, 17—including major economies such as the US, Canada, France, Japan, and China—posted record-high dividend levels. In total, 88% of companies either raised or held their dividends steady over the year.
A warehouse filled with boxes of parcels, symbolizing the companies reliable logistics services.
For this list, we screened for dividend stocks with yields higher than 3% as of May 13. From this group, we further refined our selection criteria by identifying stocks with a dividend growth streak of 10 years or more. The stocks are ranked in ascending order of their dividend yields.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points ().
Dividend Yield as of May 13: 6.84%
United Parcel Service, Inc. (NYSE:UPS) ranks fourth on our list of the best dividend growth stocks with high yields. The American multinational shipping and supply chain management company is one of the world's largest organizations. The company offers a wide array of comprehensive logistics services to clients across over 200 countries and regions worldwide.
In the first quarter of 2025, United Parcel Service, Inc. (NYSE:UPS) reported revenue of $21.5 billion, compared with $21.7 billion in the same period last year. The revenue exceeded analysts' estimates by $496.7 million. The company reported consolidated operating profit of $1.7 billion in the first quarter, reflecting a 3.3% increase year-over-year and a 0.9% rise on an adjusted non-GAAP basis. In the US segment, revenue rose by 1.4%, supported by gains in air cargo and a 4.5% uptick in revenue per piece, which helped counterbalance lower volumes. The adjusted operating margin for the segment stood at 7.0%.
United Parcel Service, Inc. (NYSE:UPS) generated $2.3 billion in operating cash flow, and its free cash flow amounted to $$1.48 billion. Due to this consistent cash generation, the company has been able to raise its payouts for 23 consecutive years. It offers a quarterly dividend of $1.64 per share and has a dividend yield of 6.84%, as of May 13.
Overall, UPS ranks 4th on our list of the best dividend growth stocks with high yields. While we acknowledge the potential of UPS as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than UPS but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the .
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at .
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