United Parcel Service
What can Brown do for you? For starters, the firm can pay you a pretty strong dividend right now. United Parcel Service (UPS - Get Report) hiked its dividend payout by 9.62% yesterday, bringing the firm's quarterly dividend to 57 cents per share, approximately a 3% dividend yield.
UPS is the largest package delivery company in the world, serving up more than 16 million packages per day though its system. Unlike the oil business, scale absolutely does matter in the delivery business, and UPS effectively competes in a duopoly with top rival FedEx (FDX) following the exit of DHL from the U.S. premium shipping market. In a system with lots of moving parts, UPS' logistical prowess is a critical component of its profitability -- the fact that the firm's transportation network operates more efficiently than rivals is telling.The package delivery business is capital-intense, and UPS' balance sheet is fairly strong given the capital requirements that the firm needs to keep up its huge network. That said, huge cash flows should easily keep supporting UPS' dividend payouts for the foreseeable future. Transports generally see expansion on the front end of the business cycle. If the economy is just starting to rev its engine again, UPS is one of the better stocks to get exposure to. UPS, one of Warren Buffett's holdings, shows up on a list of 8 Stocks to Ride the Economic Revival.