UPS Delivers Steady Capital Gains, Dividend Growth

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When it comes to capital gains and dividend growth,United Parcel Service ( UPS ) delivers.

The stock is up 38% this year, easily outpacing the S&P 500's 25% gain. Meanwhile, the company early this year boosted its quarterly dividend by almost 9% to 62 cents a share, or $2.48 on an annualized basis. The annualized dividend yield is 2.4%, just shy of the S&P 500's 2.45%.

UPS' dividend has more than tripled since 2000, growing at a compounded annual rate of 10.5%, according to UPS' website.

After stumbling during the recession, UPS' profit has picked up for three straight years. Earnings this year are seen rising 5% to $4.76 a share, followed by a 15% increase in 2014.

The company's three-year Earnings Stability Factor is 5 on a scale of 0 (most stable) to 99 (least stable).

UPS' growth is being driven by overseas expansion and the increasing popularity of online shopping. Polling firm Nielsen said last month that 46% of consumers planned to shop online this holiday season, up from 30% in 2012. Overall spending is expected to rise about 2%.

"The company strongly banks on the rapid growth in e-commerce and expects prolonged holiday shopping for using gift cards, sending return gifts and end-of-the-year sales to result in more freight shipments," Zacks Equity Research said late last month.

UPS last week launched a free mobile app ( AMZN ) Kindle Fire tablets. It lets customers track packages, find UPS stores and manage shipments through My Choice.

Meanwhile, UPS recently announced plans to expand in China amid expectations of strong growth in emerging markets.

The stock may be headed for its second test of the 10-week line since it cleared a 91.88 buy point in a cup-with-handle base in September. That would put it in a secondary buying range.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance , Investing Ideas
Referenced Symbols: AMZN , UPS

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