Earn Passive Income for Years With This Dividend Stock
Buying United Parcel Service (NYSE: UPS) stock currently offers investors an opportunity to get a 3.5% dividend yield with the promise of increased dividends for many years. As a result, it's an excellent option for passive income-seeking investors, not least because the company is demonstrating its ability to increase its long-term profitability, meaning its ability to raise dividends should increase. Here's why UPS is an outstanding stock to buy for 2023.
UPS and its rival FedEx (NYSE: FDX) had an opportunity and a challenge to face up to a few years ago. In a nutshell, burgeoning e-commerce deliveries, not least from Amazon.com (NASDAQ: AMZN) (formerly a major customer of both companies), create significant revenue growth opportunities. At the same time, e-commerce deliveries, particularly business-to-consumer (B2C) deliveries, also bring margin and free cash flow challenges.
The last statement may seem counterintuitive, but consider that B2C deliveries are often bulky (think mattresses, trampolines, etc.), inefficiently packaged (weight alone doesn't account for mass), and involve multiple deliveries to costly hard-to-deliver addresses. Contrast this with e-commerce business-to-business (B2B) deliveries involving well-packaged parcels consistently sent to a familiar address.
Source Fool.com
