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Passive income investors value reliability and returns because it is difficult to live on dividend income that is inconsistent in the size or regularity of the payout. That’s why stocks that achieve Dividend Aristocrat status are often found in passive income portfolios. Shipping giant UPS, also known simply as “brown” because of the color of its trucks, has been paying investors so long that it’s on the verge of becoming a royalty.
What is a Dividend Aristocrat? It is an unofficial but meaningful title that companies can only achieve by meeting strict standards, including:
· Membership in the S&P 500
· Minimum market capitalization of $3 billion
· 25 consecutive years of paying higher dividends to investors
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According to Insider Monkey, the Sure Dividend website and public filings, only 67 of the approximately 6,000 stocks currently trading on the NYSE and Nasdaq exchanges have achieved Dividend Aristocrat status. So you’re looking at a group of high-performing companies that represent only 1-1.5% of listed stocks in the US. That’s why achieving this status is such an achievement. That’s also why passive income investors love them so much.
UPS (NYSE: UPS) stands for United Parcel Service, one of the world’s largest shipping and logistics companies. The distinctive brown trucks and matching driver uniforms are common sights in almost every city in the country. The company’s roots date back to Seattle, Washington, in 1907, when teenagers Claude Ryan and Jim Casey borrowed $100 to start the American Messenger Company, later known as UPS.
UPS expanded its operations nationwide until 1975, when it became the first private package delivery company (according to the UPS website) to serve every address in the continental United States. UPS’s innovations continued in 1985 when it became the first company to deliver packages overnight to any address in the continental United States, Hawaii and Puerto Rico.
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By 1989, UPS had expanded its operations worldwide and even operated its own airline to handle the company’s enormous shipping volume. The company moved to its current home base in Atlanta, Georgia in 1994 and went public in 1999. UPS remains a global leader in shipping and logistics and its significant market share in this lucrative sector has paid off for investors.
According to Benzinga’s latest estimates, UPS stock is trading at $128.76, with a market cap of $110 billion. More importantly for passive income investors, UPS has been increasing dividends for investors for 22 years. In other words, UPS has paid off since the beginning of Operation Iraqi Freedom during the George W. Bush administration.
Currently, UPS’s dividend yield is a solid 5.06%, which translates into a healthy passive income of $6.51 per share. Whether UPS will achieve Dividend Aristocrat status remains to be seen, as it will be a challenge to maintain a 5.06% yield and surpass it for the next three consecutive years. Still, UPS has been delivering packages to customers for more than 100 years and has been increasing payouts to investors since 2002. That means you can probably make some green money by buying shares in “brown.”
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This article Why Buying Brown Can Get You Big Green – This Shipping Giant Is About to Reach Dividend Aristocrat Status originally appeared on Benzinga.com
