It's always good to receive dividend payments, and it's particularly nice when markets are volatile, like they are now.
United Parcel Service (UPS 0.43%) has paid a dividend for more than a quarter of a century. How many shares would you have to own to receive $1,000 in yearly payments?
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Dividend support
UPS raised its quarterly payout by a penny, to $1.64, earlier this year. The board of directors has paid dividends since its 1999 initial public offering and raised them annually since 2010.
Nonetheless, despite this track record, it's imperative for investors to make sure companies have the wherewithal to sustain dividends. Last year, UPS had free cash flow (FCF) of $6.2 billion compared to dividends of $5.4 billion. Management expects to produce FCF of $5.7 billion this year while paying out $5.5 billion in dividends.
NYSE: UPS
Key Data Points
The company notes the importance it places on dividends. UPS currently has a cushion to sustain the payments, but that's expected to narrow. Hence, investors should keep an eye out to check if that changes.
Share calculation
Turning to some basic math calculations, paying $1.64 every three months works out to an annual dividend of $6.56. To receive $1,000, you would have to own 153 shares.
The stock closed at $100.12 on April 3. That means you would have to invest about $15,300, assuming dividends stay constant. If the board of directors continues to hike payments, you'll receive higher dividend totals in future years, and a cut will result in lower payments.
UPS stock has an enticing 6.6% dividend yield, about five times the S&P 500's 1.3%.
