First up is international shipping giant United Parcel Service (UPS), the firm best known for its signature brown delivery trucks. UPS boasts a network of more than 500 planes and 100,000 vehicles that delivers around 16 million packages to customers each day. Currently the firm pays a 57-cent quarterly dividend that adds up to an annual 3.24% yield at current price levels.
UPS has some serious scale advantages. Hundreds of planes, thousands of trucks, and countless hub facilities, drop boxes and retail locations aren't cheap, and replicating the firm's global reach is nearly impossible. The firm operates in a domestic duopoly with FedEx (FDX), and the empty trucks of fallen rivals (like DHL's foray into U.S. delivery) are a testament to just how tough the delivery business actually is.
Logistics and ground shipping continue to be big growth drivers for UPS this year. With fuel prices getting held down in the latter part of 2012, the firm has been able to churn out respectable net margins -- creating more cash for shareholders to claim. While UPS' balance sheet does carry considerable leverage, it's not out of line with what investors should expect from such a capital-intense industry. With ample cash coverage for its obligations, UPS looks well positioned for a dividend hike in the next quarter.
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