ZACKSยท2025-10-22 15:40Core Insights - United Parcel Service (UPS) and Copa Holdings (CPA) are committed to dividend payments despite economic challenges, reflecting their focus on shareholder value [1][3] - Dividend-paying stocks like CPA and UPS provide steady income and lower price volatility, making them attractive in uncertain economic conditions [2] Company Performance - Copa Holdings has significantly increased its quarterly dividend from $0.82 to $1.61 per share, indicating strong financial health [3] - UPS has only marginally increased its quarterly dividend from $1.63 to $1.64 per share, raising concerns about its long-term dividend sustainability due to a high payout ratio [3][4] Financial Metrics - UPS's free cash flow has declined from a peak of $9 billion in 2022 to an estimated $6.3 billion by the end of 2024, barely covering its dividend payments of $5.4 billion [5][6] - In contrast, CPA's lower dividend payout ratio suggests a more sustainable dividend policy, with no immediate concerns about maintaining payouts [6] Stock Performance - CPA has achieved a year-to-date gain of 44.8%, while UPS has seen a significant decline in stock value in 2025 [8][10] - UPS's stock performance is negatively impacted by revenue weakness due to geopolitical tensions and high inflation, leading to reduced shipping volumes [12] Revenue and Earnings Estimates - The Zacks Consensus Estimate projects a 4.7% and 8.5% year-over-year increase in CPA's sales for 2025 and 2026, respectively, with a 13.5% rise in EPS for 2025 [15] - Conversely, UPS's sales are expected to decrease by 4% in 2025, with a 16.3% decline in EPS for the same year [17] Conclusion - CPA's lower dividend payout ratio and strong price performance, supported by robust air travel demand, position it favorably compared to UPS, which faces sustainability concerns regarding its dividends [18]