Smart investors looking for income also look to fast-growing, dominant companies. They take advantage of companies with large cash flows that ensure consistent dividend payments every year.
As far as package delivery is concerned, no company is bigger than 109-year-old United Parcel Service (UPS) . As the largest package delivery company in the world, it offers shareholders a 3.2% dividend yield. That is at least three times the average for the air delivery and freight service industry.
Among global parcel shipment companies, UPS is considered one of the leaders, and it enjoys a wide moat when considered among other freight transportation companies. UPS delivers parcels each business day for 1.5 million shipping customers to 7.9 million receivers.
The company controls over half of the market, driven mostly by e-commerce shopping at Amazon (AMZN) and other websites.
UPS is expected to continue its dominance by deploying technology-enabled operations, industry-specific customer solutions, and expanding its global network to 220 countries.
From 2014 to 2016, UPS grew annual sales from $58.2 billion to $60.9 billion and profits from $3 billion to $3.4 billion. The numbers could be better, but remember, UPS is a huge company.
It could be argued that FedEx is a better bet. But it operates at a 65% gross margin while UPS has maintained about 75%-80% for the past decade.
Debt is another important metric to look at. Large companies often have huge amounts of debt, which may force huge cash outflows during maturity and the suspension of dividends during downturns to repay debt.
The company's $12 billion debt is manageable and the company has cash and short-term investments worth $4.6 billion.
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