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Understanding FedEx’s Dividend Trend

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FedEx’s dividends

In fiscal 2Q17, FedEx (FDX) paid a quarterly cash dividend of $0.4 per share. This translates into a rise of 60% on a yearly basis. In the first half of fiscal 2017, the company paid $213.0 million in dividends, which was almost 65% higher than the dividends it paid in fiscal 2Q16.

FedEx paid a quarterly cash dividend of $0.15 per share in 2014, which was raised to $0.20 per share in fiscal 2015, reflecting a growth of 25%. In fiscal 2016, FDX paid a quarterly dividend of $0.25 per share in each quarter.

In the first week of June 2016, the company announced a rise of 60% in its quarterly dividend for fiscal 2017, taking the per share dividend to $0.40. Notably, FedEx’s forward dividend yield of just 0.8% is much lower than United Parcel Service’s (UPS) forward dividend yield of 2.7%.

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Peer group dividend payments

By comparison, Old Dominion Freight Line (ODFL) and XPO Logistics (XPO) don’t pay equity dividends. In the peer group, Yamato Holdings (YATRY) has a forward dividend yield of 0.8%. Deutsche Post (DPSGY) has a dividend yield of 2.9%, while Singapore Post’s (SPSTY) dividend yield is 3.7%.

Notably, FedEx makes up 2.5% of the portfolio holdings of the Industrial Select Sector SPDR Fund (XLI). Major US airlines and railroads make up 13.2% and 8.8%, respectively, of XLI.

FDX’s stock buybacks

Under its share repurchase program, FDX has been repurchasing shares for the past couple of years. In the first half of fiscal 2017, the company repurchased shares worth $334 million. According to the company, it repurchased 63 million shares amounting to over $8.8 billion in past two fiscal years ending fiscal 2016. The company’s remaining 19 million shares to repurchase represents 7% of the current outstanding equity shares.

Continue to the next and final part for a look at Wall Street analysts’ take on FedEx after the company’s fiscal 2Q17 results.

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