FedEx declares a dividend
Consistent quarterly dividend payments are one of the key strategies FedEx Corporation (FDX) uses to enhance shareholder returns.
On June 10, the company declared a quarterly dividend of $0.65 per share payable on July 8 to the shareholders of record as of June 24.
The company has paid a regular quarterly dividend for over 18 years. Also, except for 2003 and 2009, FedEx has been raising its dividend every year since 2002. Since 2002, the delivery giant’s quarterly dividend rate has increased 13-fold from $0.05 per share to $0.65 per share in 2019.
The company raised its quarterly dividend by 30% in June last year to $0.65 from $0.50. In fiscal 2018, FedEx paid $535 million in dividends to its shareholders. In the first three quarters of fiscal 2019, the company paid dividends of $514 million.
Dividend yield and payout
FedEx has one of the highest dividend yields among its peers at 1.6%. The company’s rival United Parcel Services (UPS) has the highest dividend yield in the air freight and land-based logistics space. Other logistics companies Expeditors International of Washington (EXPD) and Forward Air Corporation (FWRD) have dividend yields of 1.4% and 1.2%, respectively.
However, FedEx has the lowest dividend payout ratio among its peers. UPS’s dividend payout ratio of 78% is the highest in the air freight and land-based logistics industry. FedEx, Expeditors International, and Forward Air have dividend payout ratios of 24.9%, 24.6%, and 28.1%, respectively.
To gain exposure to the air freight and courier services industry, you can invest in the iShares Transportation ETF (IYT), which has allocated 20.7% of its funds to the space. The ETF has gained 11.9% year-to-date, outperforming the S&P 500’s and Dow Jones Industrial Average’s gains of 15.2% and 11.7%, respectively.