Key Takeaways
- Verizon yields 6.1% and UPS yields 6.0%, so $10,000 in either pays $607 or $600 a year today.
- Verizon’s dividend took 52% of its free cash flow over the trailing 12 months and 53% on 2026 estimates, against 85% and 88% at UPS.
- UPS declared its eighth straight quarterly dividend of $1.64 on Nov. 4, while Verizon’s dividend grew 1.5% in fiscal 2025.
- SpaceX’s push into wireless is the biggest risk to Verizon’s cash flow, and UPS expects its free cash flow to keep climbing.
United Parcel Service (UPS) declared its quarterly dividend of $1.64 a share on Nov. 4, the eighth in a row at that rate.
Verizon Communications (VZ), meanwhile, has had a rougher fall. Its shares fell about 9% on Oct. 9 after SpaceX agreed to buy a nationwide block of 800 MHz spectrum for its Starlink Mobile service.
That leaves two big dividend payers yielding 6%, with very different cushions under the check. So which is the better dividend stock?
| Metric | Verizon (VZ) | UPS (UPS) |
|---|---|---|
| Dividend yield | 6.1% | 6.0% |
| Annual dividend | $2.83 | $6.56 |
| Dividend growth, fiscal 2020-2025 | 1.9% a year | 10.2% a year |
| Cash dividend payout ratio, TTM to Sept. 30, 2026 | 52% | 85% |
| Cash dividend payout ratio, fiscal 2026 consensus | 53% | 88% |
| Net debt/EBITDA (LTM) | 3.28x | 1.71x |
| Forward P/E (NTM) | 8.7x | 13.8x |
Source: TIKR and StockAnalysis, Nov. 5, 2026.
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Verizon has room to spare
Verizon’s dividend is well-covered, taking 52% of free cash flow over the 12 months to Sept. 30, 2026, and 53% of what analysts expect for fiscal 2026.
Mobility and broadband service revenue rose 2.9% in the third quarter to $23.5 billion. Management now expects 2026 free cash flow growth to approach 12%, up from 9% to 10%.
Free cash flow has covered the dividend in every fiscal year since 2018, with the payout ratio peaking at 76.9% in fiscal 2022:
So when Verizon said on its third-quarter call, “We remain committed to growing the dividend and delivering enhanced returns to our shareholders through share repurchases,” the numbers back it up.
The main risk is SpaceX. Bloomberg reported on Oct. 23 that it is in talks to access at least 80,000 U.S. cell sites, a step toward becoming a fourth nationwide carrier.
UPS is paying out nearly everything
UPS pays a similar yield with a much thinner cushion: a tight 85% of free cash flow over the 12 months to Sept. 30, 2026, and 88% on fiscal 2026 estimates. In two of the last three fiscal years, the dividend took more than all of it, at 105.7% in fiscal 2023 and 113.3% in fiscal 2025:
Its 10.2% five-year growth rate includes one big step, as dividends paid jumped from $3.44 billion in fiscal 2021 to $5.11 billion in fiscal 2022. The dividend rose just 0.6% in fiscal 2025.
UPS is trying to make more money on fewer packages. Third-quarter revenue rose 6.7% to $22.9 billion even as U.S. average daily volume fell 3.3%, with UPS deliberately shedding low-margin volume. Its operating margin still slipped to 7.6%, from 8.4% a year earlier.
On Oct. 27, management raised its 2026 adjusted free cash flow target to about $6.1 billion, against around $5.4 billion of planned dividends. The consensus has free cash flow rising 29% from fiscal 2025, and last year’s consensus from the 9 analysts behind it landed right on the actual figure.
CEO Carol Tomé said on the call, “So clearly, our dividend is safe and secure.”
Safe, maybe. But at 88%, there isn’t much left over for raises.
So which dividend wins?
Verizon is the better dividend stock. When two yields are this close, I care most about the cushion under the check, and Verizon’s dividend takes half its free cash flow where UPS’s takes most of it.
Verizon is also still raising its dividend, slowly. At each dividend’s pace now (Verizon’s 1.5% raise in fiscal 2025, UPS’s 0.6%), $10,000 in Verizon pays about $693 in year 10, against about $634 from UPS, and UPS never catches up. At its 10.2% five-year rate, UPS would pass Verizon in 2027, but its dividend hasn’t moved in eight quarters.
And the better-covered dividend comes with the cheaper stock. Verizon trades at 8.7x forward earnings, against 13.8x for UPS, and right around its own five-year average of 8.8x:
None of that makes UPS’s dividend unsafe. It carries far less debt, covers its interest more comfortably, and expects free cash flow to clear its dividend this year. It’s just that, when it comes down to it, I’d rather own the check with room to grow.
Of course, SpaceX is targeting Starlink Mobile service on its own airwaves for early 2028, President Gwynne Shotwell said on SpaceX’s Oct. 20 call, and its spectrum deal still needs FCC approval. If it becomes a real fourth carrier, Verizon’s free cash flow is the number I’d watch.
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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!
