Top Dividend Stock for the Holiday Season

12/14/2016 10:00 am EST


Chloe Jensen

Chief Analyst, Cabot Dividend Investor

To help you get in the holiday spirit, today I will tell you what I think is the best dividend stock to take advantage of the ongoing holiday shopping, notes income expert Chloe Lutts Jensen, editor of Cabot Dividend Investor.

The Conference Board reported that consumer confidence hit its highest level since before the financial crisis. Consumers are also getting more positive about the labor market.

This is a great backdrop for the holiday season, when consumer spending and retailer results become unusually important economic indicators.

Investors wondering how to position themselves to take advantage of this situation should look for stocks that will benefit from this holiday shopping spree.

My top pick isn’t a retailer though. In fact, it’s one of the major beneficiaries of the recent decline in traditional, in-store shopping. It’s United Parcel Service (UPS), a high quality dividend-paying stock that’s hitting new highs going into the holiday season.

In recent years, the growing popularity of online shopping has contributed to record package volumes every Christmas, and record revenues for UPS.

Analysts expect earnings per share to grow 7.2% this quarter and 7.0% this year (both ending December).

However, UPS’ stock hadn’t made much progress until the last month, trading between 90 and 110 since the start of 2014.

One of the major headwinds facing the company was weak demand for its freight and supply chain services, which are closely tied to industrial activity and business investment.

But with the U.S. economy seemingly on the verge of firing on all cylinders, these businesses may soon join package shipping as profit centers for UPS.

And in the meantime, the stock pays a reliable dividend that yields a solid 2.6%. For those reasons, UPS is the best dividend stock for the holiday season.

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By Chloe Lutts Jensen, Editor of Cabot Dividend Investor

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