Key Takeaways
- UPS yields 6.1% and Kraft Heinz 6.5%, and both declared unchanged quarterly dividends on Nov. 4, 2026.
- Kraft Heinz’s dividend used 50% of its free cash flow over its latest twelve months, against 85% at UPS.
- UPS expects about $6.1 billion of adjusted free cash flow in 2026, while Kraft Heinz expects adjusted operating income to fall 16% to 18%.
- Neither dividend is growing much right now, so the choice comes down to which business can keep the checks coming.
Any retiree hunting for a 6% yield is going to come across United Parcel Service (UPS) and Kraft Heinz (KHC). Both beat expectations in their third quarters, and both declared unchanged quarterly dividends on Nov. 4: $1.64 a share at UPS and $0.40 at Kraft Heinz.
But a retiree needs a check that holds up for years, and the two businesses behind these checks look nothing alike. UPS’s revenue is growing, while Kraft Heinz’s sales are shrinking, with far more room under its dividend. So which is the better dividend stock for retirees?
| Metric | UPS | Kraft Heinz |
|---|---|---|
| Dividend yield | 6.1% | 6.5% |
| Dividend growth, fiscal 2020-2025 | 10.2% a year | 0.0% a year |
| Cash dividend payout ratio, TTM | 85% | 50% |
| Cash dividend payout ratio, forward (fiscal 2026 consensus) | 88% | 64% |
| Net debt/EBITDA | 1.6x | 2.7x |
| Interest coverage (EBIT/interest) | 6.7x | 4.9x |
| Forward P/E (NTM) | 14x | 13x |
Source: TIKR, Nov. 9, 2026. TTM runs to Sept. 30, 2026, for UPS and June 27, 2026, for Kraft Heinz; debt and interest coverage are for the latest twelve months.
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UPS is growing into its dividend
UPS’s third quarter of 2026 was a beat-and-raise. Revenue rose 6.7% from a year before to $22.9 billion, and UPS raised its 2026 outlook to about $7.28 of adjusted EPS. Its operating margin slipped to 7.6% from 8.4%, though, as UPS deliberately ships fewer Amazon packages.
The dividend is the tight spot. UPS’s free cash flow fell short of its dividends in two of the last three fiscal years, including fiscal 2025, when the payout hit 113%:
Over the twelve months to Sept. 30, 2026, the payout was a thin 85%. CEO Carol Tomé said on the third-quarter call, “So clearly, our dividend is safe and secure.” That’s bold for a payout that thin, but free cash flow reached $4.22 billion in the first nine months of 2026, up from $2.74 billion a year before, and UPS guides to about $6.1 billion of adjusted free cash flow for the year.
Bloomberg reported on Oct. 7 that a UPS employee missed an email flagging a shipment of F-35 parts as subject to US arms export rules, and the parts reached China through Hong Kong. There’s no cost attached yet, but it’s a regulatory risk to watch.
Kraft Heinz has room, for now
Kraft Heinz has the opposite setup from UPS: plenty of room under its dividend, and a business that’s shrinking. Net sales fell 2.0% to $6.1 billion in the third quarter of 2026. It raised its 2026 adjusted EPS guidance to $2.07-$2.13, but still expects adjusted operating income to fall 16% to 18% in constant currency. CEO Steve Cahillane says the plan “to turn around the U.S. business and accelerate growth internationally is on track.”
The dividend is well-covered today, at 52% of free cash flow in fiscal 2025 and 50% over the twelve months to June 27, 2026. Free cash flow has covered it every year since fiscal 2023, and dividends paid fell from $3.18 billion in fiscal 2018 to $1.95 billion in fiscal 2019:
That room is set to shrink. The four analysts who estimate it expect $2.96 billion of free cash flow in fiscal 2026, down 19% from fiscal 2025’s $3.66 billion, which would lift the payout to 64%. Management is keeping its extra brand spending at $700 million into 2027, and its dividend has sat at $1.60 a share since fiscal 2020.
So which dividend wins?
For retirees, UPS is the better dividend stock. A retiree wants a check that can keep up for decades, and what decides it for me is which way the cash behind each check is moving. Analysts expect UPS’s free cash flow to climb back above its $5.4 billion of yearly dividends and stay there:
The nine analysts estimating fiscal 2026 expect $6.15 billion, which would still leave a payout of 88%. Last year, their final estimate landed right on the actual.
The income is close for now. Put $10,000 in each, and UPS pays $610 a year against $650 from Kraft Heinz. UPS’s 10.2% a year from fiscal 2020 to fiscal 2025 leans on one big step in fiscal 2022, and its dividend per share rose just 0.6% in fiscal 2025. At that pace, UPS would pay about $645 in year 10 against $650, and pass Kraft Heinz around 2037. But UPS carries less debt, and I’d expect its raises to pick up once its cash covers the dividend comfortably again.
That isn’t to say Kraft Heinz’s dividend is in trouble. It pays the bigger check today, it would still cover it comfortably on analysts’ 2026 estimate, and management is spending to turn its brands around. It’s just that, when it comes down to it, I’d rather own the dividend with rising cash flow behind it.
Of course, UPS still has to deliver that $6.1 billion, and its fourth-quarter report early next year will show whether it did.
Forget UPS: 6 safe 6%+ dividend yields you can buy right now
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
