In the past, FedEx (FDX) has rewarded its investors with returns that were better than the market. The company’s stock has beaten market returns substantially in the past decade. In the last ten years, FedEx has returned 102% to investors—compared to the SPDR S&P 500 ETF Trust (SPY) at 74%. In the same period, United Parcel Service (UPS) returned 42%, while smaller rivals Air T (AIRT) and Air Transport (ATSG) returned 16% and 28.5%, respectively. Other logistic providers include Expeditors International (EXPD) and Con-way (CNW).
The performance is also replicated in the last five years with FedEx returning ~124%, UPS at 61%, SPY at 89%, Air T at 76%, and Air Transport at 89%. However, in the last year, smaller rivals have been able to outpace FedEx’s performance. In the last year, Air Transport has returned 26%, while Air T has returned 51%—compared to FedEx’s 19%. UPS shares fell by 2%.
Companies use dividends as a way to reward their long-term and loyal investors. Even though FedEx has had a steady dividend payout for its investors over the years, the dividend value is lower compared to most of its competitors. The company has accelerated the dividend payout by 33% and 25% in the last two increments, but it falls short of the industry average.
FedEx’s annual dividend now stands at $1 per share, after a 25% hike. The current yield is 0.56% and payout ratio is 11.2% of earnings—far below its competitors.
The company has spent billions of dollars on share buyback. In 2014, FedEx repurchased an aggregate of $4.9 billion shares through open market purchases.