FedEx raises dividend 10%, but the new yield is less than half that of rival UPS

By Tomi Kilgore

New annual dividend rate implies yield of 2.2%, above the S&P 500's implied yield of 1.4% but below UPS shares' 4.7% yield

FedEx Corp. announced Monday a 9.5% increase in its quarterly dividend, which has now more than doubled in three years.

While the dividend hike boosted the implied yield on the package-delivery giant's stock (FDX) to above 2%, that was still less than half the yield on the shares of rival United Parcel Service Inc. (UPS)

FedEx's stock rose 2.3% in afternoon trading.

The company said Monday its board of directors approved an increase in its quarterly dividend to $1.38 a share from $1.26 a share. Shareholders of record on June 24 will be paid the new dividend on July 9.

The new quarterly payout was now more than double the quarterly dividend of 65 cents paid out in April 2021.

"We remain committed to creating value for our stockholders," said Chief Financial Officer John Dietrich. "This dividend increase is an important component of our disciplined approach to capital allocation, which also includes share repurchases and prudently investing in our business."

Read: FedEx's stock soars toward a 3-year high after a profit beat, $5 billion buyback.

Also read: FedEx's stock dips and UPS flat as USPS makes changes to its air cargo business.

At current stock prices, the new annual dividend rate of $5.52 implies a dividend yield of 2.18%.

While that yield is well above the implied yield for the S&P 500 index SPX of 1.40%, it's well below the current implied yield for UPS's stock of 4.74%.

FedEx shares have gained 13.2% over the past 12 months, while UPS's stock has tumbled 19.3% and the S&P 500 has advanced 24.6%.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

06-10-24 1502ET

Copyright (c) 2024 Dow Jones & Company, Inc.