Better Dividend Stock: United Parcel Service vs. Enterprise Products Partners

Core Viewpoint - The risk-reward profile differs significantly between United Parcel Service (UPS) and Enterprise Products Partners (EPD), with dividend investors likely benefiting more from EPD's offerings [1][2]. Group 1: United Parcel Service (UPS) - UPS offers a dividend yield of 6.5%, which has increased due to a stock price decline driven by uncertainty surrounding a major business overhaul [2][6]. - The company is undergoing a transformation to streamline operations and focus on profitable business lines, which is expected to position UPS better in the long term [5]. - The current dividend payout ratio exceeds 100%, raising concerns about the sustainability of the dividend, although it is paid from cash flow rather than earnings [6][13]. Group 2: Enterprise Products Partners (EPD) - EPD provides a higher dividend yield of 6.8% and operates in the midstream energy sector, which is characterized by stable demand for its services regardless of commodity prices [8][9]. - The company has a strong track record with a 27-year streak of annual distribution increases, indicating reliable growth in distributions [9]. - EPD's distributable cash flow covers its distribution by a robust 1.7 times, and it maintains an investment-grade balance sheet, making the risk of a distribution cut unlikely [12].