Focusing on the more profitable portions of its business has allowed UPS to boost its dividends for shareholders. Paul Ziobro reports in The Wall Street Journal:
United Parcel Service Inc. UPS 14.78% is making more money shipping fewer packages and rewarding investors with a meatier dividend payout.
The delivery company on Tuesday boosted its quarterly dividend by 49%, or 50 cents a share, the largest increase since the company’s public-markets debut in 1999. The planned per-share payout of $1.52 reflects the company’s new policy under Chief Executive Carol Tomé to return half of earnings to shareholders through its dividend.
Shares rose more than 13% in morning trading after UPS posted fourth-quarter revenue and earnings ahead of analysts’ expectations. The company also said it would reach its long-range revenue and operating profit targets at the end of this year, instead of 2023.
UPS’s decision to reward shareholders with a larger dividend came the same day that AT&T Inc. T -4.76% said it would roughly halve its annual payout after spinning off its media business.
The company’s latest financial report also comes as it ships fewer packages on its trucks and planes than it did a year ago. Average daily shipping volume fell 0.6% during the key holiday period, as a 4.8% decline internationally outweighed a slight increase in the U.S. Overall revenue rose nearly 12% as the average revenue per piece shipped rose more than 11% due to higher shipping rates and surcharges implemented over the holidays.
Those trends reflect Ms. Tomé’s stated strategy of “better, not bigger” where the company is focusing on shipping more packages for its more profitable customers, including smaller businesses, and jettisoning some shipping volume where it wasn’t making as much money.
The focus is helping the company manage through a tight labor market, supply-chain challenges, inflation and disruptions from Covid-19. “We’re maniacal about controlling what we can control,” Ms. Tomé said on Tuesday’s earnings call.
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