Key Takeaways
- UPS yields 7% and Enterprise Products Partners yields 6.3%, and both reported strong second quarters in July 2026.
- UPS’s dividend used 99% of its free cash flow over the twelve months to June 30, 2026, and analysts expect 96% for fiscal 2026.
- Enterprise’s distributable cash flow covered its distribution 1.7x in fiscal 2025, and analysts expect 1.9x for fiscal 2026.
- UPS carries less debt, at 1.6x net debt to EBITDA against Enterprise’s 3.2x.
Any investor hunting for a 6%-plus dividend yield is going to run into United Parcel Service (UPS) and Enterprise Products Partners (EPD). As of Oct. 9, 2026, UPS yields 7.0% and Enterprise yields 6.3%.
And both just had strong quarters. On July 28, UPS raised its full-year 2026 outlook after finishing its planned cut of Amazon volume. Two days later, Enterprise reported a record $2.3 billion of operational distributable cash flow.
So which is the better high-yield dividend stock?
| Metric | UPS | Enterprise Products |
|---|---|---|
| Dividend yield | 7.0% | 6.3% |
| Dividend growth, fiscal 2020 to 2025 | 10.2% a year | 4.0% a year |
| Coverage measure | Cash dividend payout ratio | Distributable cash flow coverage |
| Coverage, last reported | 99% (TTM to June 30, 2026) | 1.69x (fiscal 2025) |
| Coverage, forward (fiscal 2026 consensus) | 96% | 1.91x |
| Net debt / EBITDA (LTM) | 1.63x | 3.2x |
| Interest coverage (LTM) | 7.56x | 5.03x |
UPS is paying out nearly every dollar
UPS spent the past 18 months shedding lower-yielding Amazon volume, and the second quarter of 2026 looks like the payoff. Revenue rose 7.6% to $22.8 billion from the second quarter of 2025. Adjusted operating profit rose 12% to $2.1 billion. As CEO Carol Tomé put it on the call, “this reconfiguration was never the destination. It was the foundation.”
The dividend is where it gets tight. Over the twelve months to June 30, 2026, UPS paid $5.41 billion of dividends out of $5.46 billion of free cash flow. That’s a risky 99% cash dividend payout ratio. Analysts expect 96% for fiscal 2026. Management’s own 2026 plan says much the same: about $5.5 billion of free cash flow against around $5.4 billion of dividends.
The squeeze began when dividends paid jumped from $3.44 billion in fiscal 2021 to $5.11 billion in fiscal 2022. Over the same stretch, free cash flow fell from $10.8 billion in fiscal 2021 to $4.77 billion in fiscal 2025…
…and dividends outran free cash flow in both fiscal 2023 and fiscal 2025.
The raises have slowed to match. UPS’s dividend per share rose 0.6% in fiscal 2025, against 10.2% a year from fiscal 2020 to fiscal 2025 ($4.04 to $6.56 a share), and it has been $1.64 a quarter since February 2025.
Enterprise has cash to spare
Enterprise’s distribution, by contrast, has a thick cushion under it. (Enterprise is a master limited partnership, so it pays distributions on units, and holders get a K-1 at tax time.)
In fiscal 2025, distributable cash flow covered its distribution a comfortable 1.69x: $3.66 a unit against $2.17 paid. Analysts expect 1.91x for fiscal 2026, on $4.27 a unit against $2.24.
That forecast has backing. Operational distributable cash flow hit a record $2.3 billion in the second quarter of 2026, up 21% from the second quarter of 2025.
The cushion isn’t new, either. Distributions per unit rose every year from $1.61 in fiscal 2016 to $2.17 in fiscal 2025. Distributable cash flow has covered them at least 1.63x every year since fiscal 2019.
Management says Enterprise is “on track for 28 consecutive years of distribution growth in 2026.” On Oct. 8, it declared $0.56 a unit for the third quarter, level with the second quarter and 2.8% above a year earlier.
The cost of that growth is debt. Enterprise carries 3.2x net debt to EBITDA, against UPS’s 1.63x.
So which dividend wins?
Enterprise Products Partners is the better high-yield dividend stock, because its payout has room to keep growing.
Take the pace each dividend is growing at now: UPS’s 0.6% in fiscal 2025 and Enterprise’s 3.3%. At those rates, $10,000 in Enterprise would out-earn $10,000 in UPS in about 3.9 years, around 2030. In year 10, Enterprise would pay about $846, against about $740 from UPS.
At their 5-year rates, UPS would stay ahead, paying about $1,675 in year 10 against about $900. But that rate rests on one big step-up in fiscal 2022. A dividend already using 99% of free cash flow has no cash behind a repeat.
That isn’t to say UPS’s dividend is in trouble. It pays the bigger check today: $700 a year on $10,000, against Enterprise’s $630. It also carries far less debt. It’s just that, when it comes down to it, I’d rather collect a payout with that much cash to spare.
Of course, UPS still expects about $3 billion of benefits from its cost-cutting program this year. If that pushes free cash flow well past the dividend, its 7.0% yield looks a lot sturdier. The third-quarter report will show whether UPS is on track for the $5.5 billion it expects.
So what is Enterprise Products Partners stock actually worth?
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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!
