Key Takeaways
- United Parcel Service yields 7.0% and Altria Group 6.2% at the Oct. 9, 2026 close.
- UPS’s dividend took 99% of its free cash flow over the twelve months to June 30, 2026, against 78% for Altria’s.
- UPS grew its dividend 10.2% a year from fiscal 2020 to fiscal 2025, but only 0.6% in fiscal 2025, while Altria’s rose 4.0% that year.
- What to watch is whether UPS’s free cash flow, which rose in the first half of 2026, keeps catching up to its dividend.
Any investor hunting for dividend income right now is going to look hard at United Parcel Service (UPS) and Altria Group (MO). At the Oct. 9 close, UPS yields 7.0% and Altria 6.2%.
On July 28, UPS said it had finished winding down its Amazon volume and raised its 2026 outlook. Two days later, Altria narrowed its 2026 earnings guidance and said its domestic cigarette volumes are still declining.
So which is the better high-yield dividend stock?
| Metric | Altria Group (MO) | United Parcel Service (UPS) |
|---|---|---|
| Dividend yield | 6.2% | 7.0% |
| Dividend growth, fiscal 2020 to 2025 | 4.1% a year | 10.2% a year |
| Dividend growth, fiscal 2025 | 4.0% | 0.6% |
| Cash dividend payout ratio (TTM to June 30, 2026) | 78% | 99% |
| Net debt/EBITDA (LTM) | 1.41x | 1.63x |
| Interest coverage (LTM) | 13.3x | 7.6x |
| Forward P/E (NTM) | 12.4x | 12.2x |
Fewer cigarettes, plenty of cash
Altria says its domestic cigarette volumes are declining on industry trends, squeezed consumers and smokers moving to e-vapor, while its on! PLUS nicotine pouches grow on national expansion. The company expects 2026 adjusted EPS of $5.61 to $5.72, up 3.5% to 5.5% from $5.42 in 2025.
The dividend runs on cash, though. Altria’s free cash flow rose from $8.15 billion in fiscal 2018 to $9.07 billion in fiscal 2025, topping the dividend every year along the way, and the cash dividend payout ratio stayed between 75% and 82% from fiscal 2021 to fiscal 2025.
Over the twelve months to June 30, 2026, that ratio was a solid 78%. Management put the cushion plainly on the July 30 call: “after we have the dividend, we have about $1 billion excess in cash.”
The main risk is one Altria names itself: pressure on adult nicotine consumers’ discretionary income.
UPS is through the Amazon glide-down
Where Altria is managing a product in decline, UPS spent the last 18 months shrinking on purpose. On July 28, CEO Carol Tomé thanked employees for having “successfully completed our Amazon glide down and related network reconfiguration initiatives as designed.”
The early results back her up. Second-quarter 2026 revenue rose 7.6% to $22.8 billion from $21.2 billion a year before, and UPS raised its 2026 adjusted EPS guidance to about $7.22.
The dividend is harder to cover. Free cash flow fell from $10.8 billion in fiscal 2021 to $4.77 billion in fiscal 2025, while dividends paid rose from $3.44 billion to $5.40 billion over the same years, with the big jump in fiscal 2022.
UPS paid out more than its free cash flow in fiscal 2023 and fiscal 2025, at cash dividend payout ratios of 106% and 113%, and the ratio was a risky 99% over the twelve months to June 30, 2026. That leaves little room for big raises. The dividend per share rose 0.6% in fiscal 2025, and UPS expects to pay around $5.4 billion in dividends in 2026, close to the $5.40 billion it paid in fiscal 2025.
The good news is that free cash flow for the first six months of 2026 was $1.57 billion, up from $742 million in the same period of 2025.
So which dividend wins?
Altria is the better high-yield dividend stock. Its free cash flow covers the dividend with room to spare: 78% against UPS’s 99% over the twelve months to June 30, 2026. Its dividend is also growing faster today.
That pace decides it. UPS’s 10.2% a year from fiscal 2020 to fiscal 2025 doesn’t describe its dividend now, which rose just 0.6% in fiscal 2025 against Altria’s 4.0%. UPS hasn’t raised since: its dividend has been $1.64 a quarter since February 2025. Altria raised again on Aug. 27, by 4.7% to $1.11 a quarter, its 61st increase in 57 years, and it targets mid-single-digit dividend growth a year through 2028. At the fiscal 2025 rates, $10,000 in Altria pays $620 a year today against $700 from UPS, but Altria’s income passes UPS’s in about 3.7 years, around 2030. By year 10, it’s about $882 a year from Altria against about $740 from UPS.
Altria’s cigarette business is shrinking, while UPS is growing again. But Altria’s dividend rests on cash that has held up.
This isn’t to say UPS’s dividend is in trouble. It pays the bigger check, its business is growing after the glide-down, and its first-half free cash flow rose sharply. It’s just that, for a high-yield stock, I’d rather own the dividend the cash comfortably covers and keeps raising.
Of course, UPS’s turnaround is still early. If its free cash flow keeps catching up through the rest of 2026, that 7% yield starts to look a lot safer.
So what is Altria stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Altria could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
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!
