Is UPS Stock A Buy For 2021?

The package delivery and supply chain management company United Parcel Service, Inc. (UPS - Get Rating) has been seeing increased demand for residential deliveries due to the impact of increased online shopping, among other factors.

UPS  stock has gained 83.8% since hitting its 52-week low of $82 and closed yesterday’s trading session at $161.75.

The company’s impressive performance over the past couple of months has also been driven by its COVID-19 vaccine deliveries. According to Carol Tome, UPS CEO, the company has so far delivered approximately  36.5 million vaccines.

UPS – The COVID-19 pandemic led to a big growth in online sales. This, in turn, has enhanced the demand for United Parcel Service’s (UPS) package delivery services. Because the online shopping trend is expected to continue in the post-vaccine world, we think it’s reasonable that UPS should keep thriving. Read ahead to know why it could be wise to bet on the stock now.

Here is why we think UPS could maintain its momentum:

A Thriving E-Commerce Sector

E-commerce companies fared better than companies in many other sectors amid the COVID-19 pandemic thanks to their pandemic-ready business models. With people depending more on online platforms to shop, many offline retailers have also now focused on their online presence. These factors have proved to be a boon for  UPS because retailers, unable to handle the pressure on their delivery systems, have turned to UPS to deliver their online-ordered products.

As the e-commerce trend is likely to stay because of its convenience and the shift in consumers’ buying patterns, UPS should gain steadily in the upcoming months.

Attractive Dividend

This month, UPS announced its regular quarterly dividend of $1.02 per share payable on March 10, 2021. The stock has consistently paid dividends each quarter for more than two decades. The company’s three-year and five-year divided CAGRs stand at 6% and 6.4%, respectively. While the four-year average dividend yield for UPS is 3.2%, the current dividend translates to a 2.5% yield.

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