UPS has better dividend potential than Ford due to strategic initiatives and growth prospects.
From Yahoo Finance: 2025-05-17 18:41:00
Investors are eyeing high-yield stocks like Ford and UPS, which offer dividend yields of 7.1% and 6.5%, respectively. However, both companies are at risk of cutting their dividends due to challenging trading conditions. UPS plans to pay out $5.5 billion in dividends in 2025, while Ford’s dividend situation is more complex, potentially using up to 89% of its free cash flow on dividends.
Recent changes in the trading and cost environment have led both Ford and UPS to suspend or not update their guidance. UPS faces worse-than-expected declines in average daily volumes, while Ford is grappling with potential supply chain challenges and tariff uncertainties. Both companies could be forced to cut their dividends in 2025 due to deteriorating trading conditions.
Ford’s strategic focus on transitioning to electric vehicles is slow, with a loss of $5.1 billion in the EV segment in 2024. In contrast, UPS is strategically shifting toward higher-margin deliveries and investing in productivity-enhancing technologies. The company aims to increase its return on assets by focusing on SMB and healthcare segments, expecting significant revenue growth.
While both Ford and UPS face the risk of cutting their dividends, UPS appears to be on a better strategic trajectory than Ford. UPS’ focus on higher-margin deliveries and productivity enhancements positions it well for recovery post-dividend cut. In contrast, Ford’s transition to EVs faces challenges in a competitive market dominated by Tesla.
Investors considering buying Ford stock should note that it may not be among the top 10 stocks identified by The Motley Fool Stock Advisor team. The team’s previous recommendations have led to significant returns, outperforming the S&P 500. UPS is seen as a potentially better long-term investment compared to Ford, given its strategic initiatives and growth prospects in high-margin delivery segments.
Read more at Yahoo Finance: Better Dividend Stock: UPS vs. Ford