FedEx (FDX) Rewards Shareholders With 60% Dividend Hike

FedEx Corporation (NYSE:FDX) – a leading player in the field of global express delivery services – recently announced a hike in its dividend payout. The move reflects the company’s intention to utilize free cash to enhance shareholders’ returns, thereby boosting investor confidence in the stock.

The Memphis, TN-based company raised its quarterly dividend by 60% to 40 cents a share (or $1.60 annually) from 25 cents (or $1 annually). The new dividend, which has been approved by the company’s board of directors, will be paid on Jul 1, 2016, to stockholders on record as of Jun 16. The shareholder-friendly move has naturally pleased investors, driving the stock in after-market trading on Jun 6. The dividend yield based on the new payout and the last closing market price is approximately 0.98%.

We believe that the raised dividend highlights FedEx’s commitment to create value for shareholders and underscores the company’s strong financial condition and bright prospects going ahead. Moreover, a look at past records reveals FedEx’s stable dividend payment history.

We remind investors that FedEx’s rival, United Parcel Service, Inc. (NYSE:UPS) , had also raised its quarterly dividend by 9% in Feb 2016. Following the hike, the company's quarterly dividend payout now stands at 78 cents per share ($3.12 on an annualized basis).

As investors prefer an income generating stock, a high dividend paying one is much coveted. Needless to say, investors are always on the lookout for companies that have a track record of consistent and incremental dividend payments.

Zacks Rank & Stocks to Consider

FedEx currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader transportation sector include SkyWest, Inc. (NASDAQ:SKYW) and Air France-KLM SA (OTC:AFLYY) . Both the stocks sport a Zacks Rank #1 (Strong Buy).