The United Parcel Service delivery service maintains a high dividend yield

The international delivery service, United Parcel Service Inc. (UPS), has lost almost 15% of its value since the beginning of the year. Investors were unhappy with the forecast that management presented for the coming quarters. Despite this, United Parcel Service operates profitably and pays dividends that outperform the S&P 500 index and government securities.

Currently, the United Parcel Service dividend yield is 3.6%, which is noticeably higher than the yield of US 10-year Treasury bonds, at 2.78%, and the average yield of the S&P 500. Moreover, UPS dividends have great growth potential due to the expansion of the delivery market. In the first quarter of 2022, United Parcel Service recognized a decrease in delivery volumes in the US domestic market and in international markets. However, the current cost reduction, according to management, can only be temporary. The company recognizes the presence of weakness in the economy, which may lead to a decrease in purchasing power and a decrease in the activity of delivery services. It is expected that the volume of domestic and international shipments will be lower than previously expected.

However, United Parcel Service predicts that revenue by the end of 2022 will be from $98 million to $102 million, while a year earlier the company received just over $97 million in revenue. The forecast for 2023 also assumes sales growth of $102 million. United Parcel Service compensated for the decrease in the volume of parcels by increasing prices to a level higher than the increase in transportation costs and wages. This helped the company to ensure not only high revenue (consolidated growth was almost 6.5%) but also profit (plus 17% year-on-year).