The dividend is growing for this shipping company, and with the holiday season is full swing, analysts are expecting the company to grow 25.8% this quarter.
FedEx Corporation (FDX)
From Dow Theory Forecasts
Delivery titan FedEx Corporation (FDX) has never been known for its high yield. Currently, the indicated year-ahead dividend (assuming four payments of the most recent quarterly dividend of $0.65) provides a yield of a little more than 1%, roughly in line with the average for transportation stocks in the S&P 1500 Index.
However, FedEx’s dividend growth separates it from the pack. Over the last 10 years, FedEx has grown the payout at an annualized rate of 35%. The dividend grew at a 36% annualized rate over the last -three years, including a 30% increase early this year. Over time, as the dividend rose at a faster pace than the share price, the yield has increased.
Ten years ago, the stock yielded 0.4%, about a third of its current yield. With the current dividend gobbling up just 15% of earnings, FedEx shows no sign of slowing down. In an effort to offset the effect of higher costs, on November 5 the company announced plans to raise shipping rates an average of 4.9% on most U.S. services after the holidays (January 7).
FedEx is a Buy and a Long-Term Buy.
Richard Moroney, CFA, Dow Theory Forecasts, www.dowtheory.com, 800-233-5922, November 12, 2018